UPDATE 1-India's Reliance Power beats forecasts as it adds capacity
* Q2 net 2.4 bln rupees vs estimate 2.1 bln rupees
* Sales more than doubled to 10.8 billion rupees
* Says new power units to commence in a few weeks (Adds details, shares, background)
Nov 5 (Reuters) - Indian utility Reliance Power Ltd reported a 2.1 percent rise in quarterly net profit, beating expectations thanks to higher generation capacity and said new power units would start production in the next few weeks to add yet more capacity despite a scarcity of fuel at other plants.
India's power companies are struggling to source fuel as domestic coal production stagnates and gas production remains below expectations. The fuel shortage has forced other power plants to run below capacity because fuel supply is tied to specific plants.
Earlier this year, India suffered one of the world's worst power blackouts, affecting about half of the country's 1.2 billion population.
Reliance Power, controlled by billionaire Anil Ambani, reported a net profit on Monday of 2.4 billion rupees ($44.65 million) for the second quarter ended Sept. 30, compared with 2.35 billion rupees a year ago. Net sales more than doubled to 10.79 billion rupees, it said.
Analysts on average had expected a net profit of 2.1 billion rupees according to ThomsonReuters I/B/E/S.
The company said its fuel costs more than doubled to 6.37 billion rupees and finance expenses jumped 82.7 percent to 1.37 billion rupees.
Reliance Power generated 1,655 million kilowatt-hours, up 65 percent from the previous year in the quarter from its Rosa plant in the northern Uttar Pradesh state, the company said.
The first unit at its 3,960 megawatt (MW) Sasan power project and the second unit at Butibori project should be commissioned in the next few weeks, the company said.
Two of Reliance Power's projects totalling 6,400 MW have been stalled due to scarcity of cheap fuel and it faces the risk of losing one of those due to a legal wrangle with four state governments.
The company also ran into trouble in August when the country's federal auditor said it unduly benefited from a government decision allowing the power producer to use surplus coal from its captive block for another project it was not meant for.
Shares of the company, valued by the market at about $5 billion, were flat at 97.35 rupees by 0910 GMT when the Mumbai market was down 0.28 percent.
($1 = 53.75 rupees) (Reporting by Kaustubh Kulkarni and Aradhana Aravindan in MUMBAI; Editing by Matt Driskill)
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