The Teesta-III hydro power project, promoted jointly by the Sikkim government, private players and a group of private equity (PE) investors, is likely to be sailed out of rough waters by the state.
If the PE investors exit the project, the state government is ready to bail out the venture, which had faced contractual delays and natural calamities. After the consortium of PE investors, under holding company Varuna Investments, had complained to the Centre about cost overruns of the project running up to Rs 615 crore, the Sikkim government has expressed its desire to buy out the equity of other investors.
“The state government is proactive. In a situation where other investors don’t participate in subscribing to the equity, we are ready to pick up all the equity,” said a senior official of Sikkim Power Corporation.
The government has 26 per cent equity in the project. The PE investors are US-based Morgan Stanley Infrastructure Partners, General Atlantic, Goldman Sachs Asset Management, Everstone Capital and Norwest Venture Partners and UK’s Ashmore Investment Management.
Varuna invested Rs 1,200 crore in Teesta-III. The investors have also expressed fears that the investment is under threat, as the remaining stakeholders “have been dilly-dallying on meeting their share of cost overruns amounting to Rs 615 crore”.
They had complained that the Sikkim government had failed to meet its commitments and settle disputes with contractors. The project was supposed to go on stream last year in phases. Teesta Urja Limited, a special purpose vehicle (SPV), formed by a consortium led by Athena Power Developers along with the Sikkim government and Power Trading Corporation (PTC), was allotted the hydro power project on a build-own-operate-transfer (BOOT) basis. About 90 per cent of the work was completed and it required Rs 615 crore to go on stream by January next year. The SPV had made a fresh and final capital call on all the stakeholders on May 30 this year.
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