GMR International, a wholly-owned subsidiary of Bangalore-based GMR Infrastructure, today signed an agreement with the Netherlands-based power producer InterGen NV to acquire the latter's 100 per cent ownership stake in Island Power, a Singapore-based private electric power utility.
With this all-cash deal for an undisclosed sum, InterGen will completely exit from Singapore.
Island Power is currently developing an 800-Mw combined cycle power facility fired by natural gas, located on Jurong Island, Singapore.
GMR had acquired 50 per cent in InterGen during 2008 for around $900 million and, thus, had gained an indirect interest in Island Power.
In addition to its interest in this Singapore project, InterGen has stakes in 12 operating power plants, including one under construction, with a gross capacity of 8,258 Mw and 4,822 Mw of assets under development.
After gaining control, GMR Infrastructure, through its arm, will invest around Rs 4,905 crore by way of foreign direct investment into Singapore to develop this project and to cover the cost of acquisition, according to Madhu Terdal, chief operating officer for global business at GMR Infrastructure.
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The construction of the power plant is slated to begin in the fourth quarter of 2010 and would start commercial production by 2013.
The plant will provide power to private users on a merchant basis in Singapore. Terdal said this is GMR's first foray into the Singapore power market.
"We will develop this project under the GMR banner instead of InterGen, which did not want to pursue this project as it was not feasible for them. That is the reason we have acquired the stake from them and will develop it further. It is a significant project for us and we will make significant value addition in the project. It will help us gain a strong foothold in the South-East Asian region," Terdal told Business Standard.
He pointed out that the plant requires 100 million cubic feet of natural gas, which will be imported from Indonesia.
"The company is currently in the process of finalising the supply of gas from Indonesian suppliers," he said.
GMR Power currently has capacity to generate close to 900 Mw of power from three power plants in South India. The company is putting up generating capacities for around 4,200 Mw over the next four years with plants in Orissa, Chhattisgarh and Maharashtra, most of which would be powered by coal. The company is also lining up 5 hydel power plants with a capacity of 1,200 Mw on a cumulative basis.