Tata Power joint venture gets letter of intent for 1,930MW coal plant

Rival JSW Energy reportedly revised its offer for the plant after the letter was awarded.

The lenders of Prayagraj Power Generation Company (PPGCL), a 3X660MW coal-based power project based in Uttar Pradesh, have issued a letter of intent (LoI) to Resurgent Power Ventures (Resurgent Power) for acquisition of 75.01% stake in PPGCL.

Resurgent Power is a joint venture based out of Singapore, and is held 26% by Tata Power through its wholly-owned Singapore-based subsidiary. The balance 74% of Resurgent Power is held by ICICI Bank and investors of international repute.

Tata Power CEO and managing director Praveer Sinha said, “After our due diligence, we found that Prayagraj Power fits in our overall scheme of growth. It has all approvals and clearances in place along with long-term PPA and fuel supply agreement. It will be a value-adding asset in Resurgent Power’s portfolio.”

Meanwhile, reports from local media said that JSW Energy has revised its offer for the plant just a day after Resurgent Power has been awarded the LoI for the plant’s acquisition.

Against Resurgent Power’s offer of Rs 6,086 crore, JSW Energy has agreed to pay about Rs 6,200 crore for the power plant. Both the companies have accepted to bear the plant’s tax liabilities of about Rs 2,856 crore.

JSW was also awarded a similar LoI about three weeks ago, but its previous offer did not include the promise of bearing tax liabilities, sources said.

The plant entered into a 25-year PPA with five distribution utilities of Uttar Pradesh in 2008 for sale of 90% of power generated. It executed a fuel supply agreement in August, 2013 with Northern Coalfields (NCL) for supply of 6.95 MTPA of coal.

The project was commissioned 33 months after the scheduled date because of delays in land transfer by Uttar Pradesh, slow equity infusion by the promoter, increase in foreign exchange variation, rate of interest, cost of equipment and labour as per contract and interest during construction due to time overrun, reports said. 

Photo by Biswarup Ganguly, CC BY 3.0