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Hindujas look to sell stake in power project

Hindujas look to sell stake in power project
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First Published: Thu, Jul 23 2009. 10 34 PM IST

Seeking partner: Hinduja’s India chairman Ashok P. Hinduja.
Seeking partner: Hinduja’s India chairman Ashok P. Hinduja.
Updated: Thu, Jul 23 2009. 10 34 PM IST
Hyderabad: The Hinduja group is in talks with prospective partners to sell up to 49% equity in a proposed power plant it intends to build near Visakhapatnam in Andhra Pradesh, a top executive said.
“There are a lot of companies that have shown keen interest in picking up stake in our power project,” Prabal Banerjee, the group’s chief financial officer, told Mint. “We are now in talks with two-three firms and hope to sell the stake to one or two of them in the next couple of months.”
Hinduja Power Co. Ltd will achieve financial closure for the coal-fired project by the end of October, Banerjee said. A financial closure occurs when promoters of a project provide legally binding commitments to mobilize funding.
Seeking partner: Hinduja’s India chairman Ashok P. Hinduja.
Banerjee said the project will have a debt to equity ratio of 75:25, with about Rs4,125 crore in debt and Rs1,375 crore in equity. The group plans to execute the project within 45 months from the date of financial closure, he said. SBI Capital Markets Ltd has been given the mandate to raise the debt.
The group’s India chairman, Ashok P. Hinduja, met Andhra Pradesh chief minister Y.S. Rajasekhara Reddy on Wednesday and assured him of a financial closure by October, the spokesperson for the chief minister’s office said.
The official also quoted the group’s executives as saying that they had obtained coal linkage for the project from Mahanandi Coalfields Ltd in Orissa and arranged with the Indian Railways to have the fuel delivered. “Following this, the chief minister, who reviewed the project on Wednesday evening, advised the officials of power, revenue, environment, forest and registrations to settle issues pending with them within three weeks,” the spokesperson said.
However, an official in the state’s power ministry said there are still some issues that were needed to be sorted out.
The Andhra Pradesh government, keeping in view the unprecedented demand for power in the state, is insisting that Hindujas supply at least 50% of the power to the state at Rs1.80 a unit, which is on a par with the price it is now paying to state-owned power utility NTPC Ltd for drawing power from its Simhadri power plant in the state, the official said on condition of anonymity citing the sensitivity of the issue. “The pricing of power and the quantity of power to be supplied to state are the two key issues that are not yet resolved.”
Banerjee said the Hindujas propose to enter into a power purchase agreement (PPA) with the power distribution companies (Discoms) in Andhra Pradesh for 25% of power produced from this plant and would like to sell the remaining 75% in the open market.
“We are yet to enter into PPA with the Discoms and hope to amicably sort out the issues pertaining to quantity of power to be supplied to the state and the selling price,” he said.
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First Published: Thu, Jul 23 2009. 10 34 PM IST