Singaporean utility major, Sembcorp as well as Malaysian major Genting, have reportedly conducted due diligence to buy a power plant, owned by Nagarjuna Construction Company (NCC) and Gayatri Projects.
“Both these companies have conducted due diligence and evaluated the project, and are expected to make offers,” said a top executive close to the development.
The 1,320 megawatt (Mw) power plant that these foreign companies are eyeing, is located in Krishnapatnam, Andhra Pradesh. The total cost of this coal-based project is around Rs 7,000 crore. The extent of interest that the NCC and Gayatri are willing to offload is not known, but industry insiders say the foreign utilities might be looking at a majority stake, which will be offloaded by NCC, while Gayatri will stay on the project.
The Nagarjuna Construction Company is the majority partner of the project, with around 55 per cent equity. Hyderabad-based Gayatri Projects owns the rest of the equity, which it acquired in 2011. Neither Gayatri Projects nor NCC responded to e-mails, SMSes or phone calls on the development. The project currently is under-construction, and unlike the 4,000-Mw ultra mega power project located in the same areas, the project owned by NCC and Gayatri has a mix of domestic and international coal.
While 70 per cent of coal to the project will come from Coal India's subsidiary, Mahanadi Coal Fields, the rest will be supported from imports. The Krishnapatnam area is a power belt with two more power projects under works and also has a port close by, aiding with imports of coal.
The project is expected to be commissioned in the first half of 2015. More than two-thirds of the power that this project would be producing has already been tied-up in long-term power purchase agreements.
Apart from power, Nagarjuna Construction Company is primarily a construction company which has contracts across irrigation, transportation, power and electricals. The company had an orderbook of around Rs 3,200 crore by the end of December, 2012.
Sembcorp already has a stake of 49 per cent in a 1,320 megawatt power project in the same location at Krishnapatnam. The project, under the name ‘Thermal Powertech’, also has Gayatri Projects as a partner, owning 51 per cent of the equity. Sembcorp has an international presence and an installed capacity of over 10,000 megawatts. It has energy and water utilities across Vietnam, China, Oman, the UAE and the UK, in addition to Singapore.
Genting group owns a number of casinos and resorts in Malaysia and abroad, and it too has diversified interests. The group has energy assets under Genting Power Holdings. Apart from oil exploration in China with Sinopec, Genting also owns and operates coal-based assets in China apart from Malaysia. In India, Genting has a 35 per cent stake in Lanco Infratech’s gas-fired power proect in Kondapalli in Andhra Pradesh. It also holds a stake in the Aban Power Company, which has a power plant in Tamil Nadu.
