Sithe Global Power Llc., owned by the Blackstone Group, is in talks with India’s SKS Ispat and Power Ltd for acquiring equity stake in the latter’s 1,200MW coal-based power project in Chhattisgarh, said two people aware of the development.
“They (SKS) are in talks for Sithe Global’s investment in the project,” said a person aware of the development, who did not want to be named.
“SKS Ispat and Power has been looking for strategic investors. The talks are in advanced stages and Sithe will also help SKS in developing the project. The deal is likely to be announced by the end of the month,” added another person aware of the development, who also requested anonymity.
SKS’s project is in Chhattisgarh. The project has a coal requirement of around 60.2 million tonnes per annum and may require an overall investment of around Rs 5,000 crore. The company is in talks with Chinese manufacturers such as Shanghai Electric and Harbin Power Equipment Co. Ltd for equipment.
While questions emailed to Anil Gupta, promoter and chairman and managing director, SKS Ispat and Power, on 14 December remained unanswered, Ramakrishna Thota, vice-president, projects, SKS Ispat and Power, and a Sithe Global Power spokesperson declined comment.
The Blackstone Group in an email response said, “As a matter of policy, Blackstone does not comment on market speculation.”
The possible investment in a power-generating firm is in line with Balckstone’s India strategy. Blackstone is investing $300 million for a significant minority stake in unlisted Indian power developer Moser Baer Projects Pvt. Ltd. It had earlier invested in Monnet Power Co. Ltd, a subsidiary of Monnet Ispat and Energy Ltd, which owns a coal-fired plant in Orissa and is also in talks with Kolkata-based power producer Visa Power Ltd.
“We are actively in dialogue with other power players (for picking up a stake),” Blackstone India chief Akhil Gupta had told reporters in August while announcing the Moser Baer deal.
Blackstone has already invested $1.25 billion in Indian projects, with a majority of the funds committed to infrastructure and logistics.
India’s power sector is struggling with funding shortfalls. According to a paper by industry lobby Federation of Indian Chambers of Commerce and Industry and Crisil, an investment of Rs 11 trillion is required in the power sector in the 12th Plan period (2012-17). The government is worried about the shortage of funds in the power sector, which, in turn, threatens to exacerbate an energy deficit seen as a key bottleneck in efforts to sustain and boost economic growth.
India has a power generation capacity of 167,000MW and had plans to add 78,577MW by 2012.
Divya Guha contributed to this story.