The promoters of the Sasan ultra-mega power project have clarified that their plans are on course. The decision by the parent company of the lead promoter, Globeleq, to hive off some of its global assets, they added, will not impact operations.
The decision by the CDC Group Plc., a UK government-owned fund, with net assets of $2.9 billion, to hire Lehman Brothers as a consultant ahead of hiving off some of the global assets of Globeleq had triggered reports that the Sasan project in Madhya Pradesh was in trouble.
G. Venkatesh Babu, managing director, Lanco Group, said, “These (media reports) are plain speculation and the Sasan project is not on the block. The Globeleq sale of assets does not mean that Globeleq is getting out of the power business completely.”
As per the Sasan project guidelines, a promoter cannot divest more than 49% of the equity until two years after the project starts commercial production, and will have to retain at least 26% for another 10 years.
In the event of the selected bidder being a consortium, the conditions will apply to only its lead member, and not all promoters or stakeholders in the project entity. At present, Globeleq holds 70% equity in the project.
Any pull-out by Lanco may benefit Reliance Energy Ltd as it had quoted a tariff of Rs1.29 per unit for the project as compared to Rs1.19 quoted by the Lanco and Globeleq consortia. Lanco had edged out competition from NTPC Ltd, Tata Power and Reliance Energy.
With investments in 20 power companies in 15 countries, spread over Africa, the Americas and Asia, Globeleq owns assets valued at more than $1.5 billion.
Stephen B. Morisseau, vice-president, corporate affairs, Globeleq, backed the Lanco stand and said, “Globeleq’s development activities are not included in the process. The Sasan project will not be affected. As the sales process is still going on, we cannot discuss any further details.”
L. Madhusudhan Rao, chairman, Lanco Group, reiterated that stand and said, “We have a confidentiality agreement with Globeleq Singapore to carry out the Sasan project, which we do not wish to disclose. The sales by Globeleq are only asset sales and will not affect the Madhya Pradesh project.”
A meeting has been scheduled in Bhopal on 28 February for the signing of the power purchase agreements for the Sasan project, wherein the Lanco consortium has to come up with the performance guarantee money of Rs180 crore. The company has already deposited the bid money of Rs120 crore.
“The company is also supposed to pay Power Finance Corporation for the Sasan special purpose vehicle’s (SPV’s) work for the money spent so far on input costs, which is around Rs50 crore,” a senior government official involved in the power project process said.
Commenting on the issue, Anil Razdan, power secretary, said, “We are studying the situation and have not received any official report from the consortium.”
Shyam Wadhera, director, projects, Power Finance Corporation, the nodal agency for ultra-mega power projects, said, “We have not received any information about Globeleq exiting the Sasan project. As far as we are concerned, they have to complete it. Once the documents are completed on 28 February, we will transfer the SPV created for the project to them.”