Mumbai: A joint venture between Essar Power and German wind-energy firm Repower Systems AG has been delayed because the latter is now the focus of an acquisition battle between French firm Areva SA and India’s Suzlon Energy Ltd.
Essar and Repower were supposed to start producing wind-turbines through the Indian joint venture by the end of 2007, but the project has now hit a dead-end, said a senior official at Essar Power who asked not to be identified. “We acquired land near Hazira (in the western state of Gujarat) and have also hired people for the venture, but now things have come to a standstill,” he added. He said the company had even hired a managing director for the joint venture, and attributed the delay to the bidding-war for Repower. “Though the joint venture agreement is with Repower, the change in ownership (when it happens) will mean that the joint venture requires the approval of the new owners as well,” he added.
Repower, however, claimed there was no delay in the project. “There is no delay in the second step—to form the joint venture—planned for 2007. First, we wanted to get to know the Indian market better,” said Hanna Scherger, team assistant public relations, investor relations and legal affairs for Repower in an emailed response.
Essar Power had entered into a 50:50 joint venture with Repower in September 2006. The joint venture was to manufacture 2MW turbines to be sold in India, Malaysia, Vietnam and Thailand. It was formed to tap the wind-energy market in India which is pegged at 45,000MW. Currently, India has more than 7,000MW of installed wind-power capacity.
The fight to acquire Repower began in February when Areva SA, shareholder in the German company, made an open offer at €105 (Rs5,880) per share. Suzlon joined hands with another major shareholder of Repower, Portugal-based Martifer to trump Areva’s bid by offering €126 for every share. Subsequently, in March, Areva and Suzlon hiked their offer price to €140 and €150 per share, respectively. The fate of Repower will be decided on 4 May, when the open offer to the shareholders closes, unless Areva comes up with a higher bid before that date.