Shimla: Jaiprakash Associates, one of the largest investors in Himachal Pradesh, is all set to exit from the hydropower sector in the hill state as it plans to sell its two hydropower plants – the 1000 MW Karcham Wangtoo and 300 MW Baspa project, within the financial year.
Though there were several companies in the fray but sources revealed that the Abu Dhabi Water and Electricity Authority (ADWEA), a government owned public utility company, was in an advanced stage to acquire both the projects.
Taking advantage of the drop in Rupee – Dollar exchange rates, it could turn out to be one of India’s largest asset sales of a power company in distress.
Where the total project cost for the two operating plants has been estimated at about Rs 9000 crore, which includes equity, the ADWEA deal is being put at about $2 billion dollars (about Rs 12,000 to Rs 13,000 cr at Rs 65 to a dollar conversion rate).
Jaiprakash Power Ventures Ltd, an arm of Jaiprakash Associates, a listed company operates the two plants and is the largest private player in the hydropower sector.
When contacted Askar Zaidi vice-president, corporate communication, Jaypee Group refused to comment on the development. “We do not react to market speculations,” he said.
Though the Karcham Wangtoo project was approved for a 1000 MW capacity but the four turbines installed at the underground plant, when operated at full capacity are in a position to generate 1200 MW of power. However, the issue of capacity utilization is pending clearance with Central Electricity Authority.
The 300 MW Baspa plant is located on Baspa River, a tributary of Satluj River and is one of India’s first hydropower plants in the private sector that was commissioned in 2005-2006.
When contacted principal secretary power SKBS Negi expressed ignorance and said that the state was not in the know of the development. “The power company has not intimated us nor have we been informed about any plans of ownership change, said Negi.
When contacted over email, Allan Virtanen, TAQA global head media declined to comment. “As a rule we do not comment on market speculation or rumour,” he said.
The large Karcham Wangtoo project, like the Baspa project, is a run of the river plant set up by damming the fast flowing Himalayan River.
With power rates having fallen from Rs 7 per unit to Rs 2 to Rs 3 per unit over the last five years and demand for power off having fallen, many of the hydro plants in Himachal Pradesh are either operating below capacity for not finding energy buyers or are suffering from making timely realizations of power sale receipts from distribution networks which include state boards.
Besides ADWEA, there were several others companies from Middle East, Norway and domestic companies in the fray, eying the money spinning plants in Himachal Pradesh, but the deal with the Abu Dhabi Company was in the final stages of being wrapped up.
Jaiprakash Power Ventures also operates a power plant, Vishnu Paryag in Uttarakhand, which suffered some damage in the recent flash floods.
Senior management of Jaiprakash Associates, which carries an estimated debt of about Rs 64,000 Cr on its books, had only recently disclosed that it planned to reduce debt by about Rs 15000 crore in the current financial year.
Sources also claimed that the group was in the final stages of selling a cement plant in Gujarat for about Rs 3800 Cr to Ultratech, a Aditya Birla group company.
While the Jaypee Group was keen to sell the two hydro plants, however the Jaypee Cement plant in Himachal Pradesh is not being considered for sale, source privy to the matter disclosed.
Only in January, 2013 TAQA along with an Indian partner TAQA Jyoti Energy Ventures Pvt. Ltd. (TAQA Jyoti), had announced having acquired majority interest in the Himachal Sorang Power Ltd (HSPL), a company that is developing a 100 MW power project in Himachal Pradesh. The plant is expected to become operational later this year
About the acquisition of HSPL, Carl Sheldon, TAQA chief executive officer had then said, “This investment will both complement our existing power generation business in India and support TAQA’s nascent renewable energy stream, It also reflects our confidence in the Indian market.”
TAQA already operates a 250 MW lignite power station in the Neyveli region of southern India,where capacity is under expansion to 550 MW.
TAQA in Arabic means energy. The international energy and water company listed in Abu Dhabi operates in 11 countries across four continents.