CMS, ABB sell Neyveli pie to UAE firm

US power utility major CMS Energy Corporation and Swiss engineering and technology group ABB have agreed to sell power assets worth $1.39 billion to Abu Dhabi National Oil Co (Taqa).

CMS said today it would sell its stakes in West Asia, Africa and India to the UAE-based Taqa for $900 million to focus on investments in its Michigan state utility.

ABB said it would sell its stakes in a power project in Morocco and another in India for $490 million as it pushes ahead with the divestment of non-core businesses.

CMS Energy and ABB are the major promoters of the power project at Neyveli, Tamil Nadu.

As per CMS Energy's 2005 annual report, CMS International Ventures held 50 per cent interest in CMS Generation Neyveli, the 250 mw lignite-fired power station located in Tamil Nadu.

ABB holds its stake in the project through subsidiary ABB Energy Ventures.

In February 2005, CMS had sold its stake in GVK Power and Infrastructure (GVKPIL), a 250 mw gas-fired power plant, for $21 million.

As per the annual report, CMS said it had gained on the sale of GVK.

In the fourth quarter of 2004, an impairment charge was recorded to recognise a reduction in fair value as a result of the sale of GVK, which included a goodwill impairment of $5 million. The company closed the sale in February 2005, the report added. GVKPIL was originally promoted by GVK and CMS in the ratio of 40:60. As per GVKPIL's initial public offer prospectus, the company had incurred a debt of Rs 82 crore for buying CMS' stake.

In 2001, CMS had officially stated it was looking to exit India but did not give a timeframe.

CMS had exposure to three projects in the country, including the Neyveli independent power project, the 235-megawatt gas-fuelled GVK plant in Jegurupadu, Andhra Pradesh, which CMS began operating in 1997 as India's first independent power project and the 200 mw diesel-fuelled GMR Vasavi (now GMR Infra) in Chennai, which was the first independent power project in Tamil Nadu.

Meanwhile, Taqa Chief Executive Peter Barker-Homeksaid in a statement the sale was expected to close by mid-year.

"The move is part of our ongoing divestment of non-core businesses, as we continue to focus on our power and automation technologies," ABB Chief Financial Officer Michel Demare said, adding the company had obtained a fair price for the stakes, fully reflecting the quality of the assets.

"Although in the short run we would lose the earnings from the businesses sold, debt reduction and increased investment in the utility will support future earnings growth and improve reliability and service for Consumers Energy customers,'' CMS President David Joos said in the statement.