A consortium led by TAQA, the international energy and water company from Abu Dhabi plans to acquire two hydropower plants in India, making the UAE company the largest private operator of hydroelectric plants in India.
“The agreement follows the signing of the UAE-India Bilateral Investment Promotion and Protection Agreement in December 2013 and a commitment made by the UAE to invest $2 billion in India’s infrastructure sector at the first UAE-India High Level Joint Task Force on Investments meeting held in Abu Dhabi in February 2013,” a company release said.
The consortium agreed to purchase the Baspa Stage II and Karcham Wangtoo plants in Himachal Pradesh, from Jaiprakash Power Ventures Ltd, a subsidiary of Indian infrastructure conglomerate Jaypee Group.
TAQA, which holds a 51 per cent stake in the consortium, will have control of operations and management of both facilities under the proposed deal. The remaining equity will be held by one of Canada’s largest institutional investors (39 per cent) and IDFC Alternatives’ India Infrastructure Fund II (10 per cent).
The equity invested by the consortium in the acquisition of the two hydroelectric plants will amount to approximately Rs.3,820 crore ($616 million), of which 51 per cent is from TAQA. The consortium will also acquire the assets’ non-recourse project debt.
The acquisition is expected to close in 2014 and is subject to regulatory and third-party approvals.
“India’s economic growth depends on having ample and reliable energy supply. TAQA is pleased to add these two high quality hydro power assets to our growing India business and to support India’s economic growth,” said Frank Perez, Executive Officer and Head of Global Power & Water, TAQA.
The two plants have a combined power generation capacity of 1,391 MW. Both plants are located in Kinnaur district of Himachal Pradesh within 2 km of each other and share support facilities. They use run-of-river technology to convert natural water flow to electricity, eliminating the need for a reservoir. The plants are 35 km from the Sorang hydroelectric plant, in which TAQA acquired a stake last year.
Following the completion of the transaction, TAQA’s gross operational power generation capacity in India will total 1,741 MW comprising three hydroelectric facilities and one lignite power plant.
At present, TAQA owns and operates a 250-MW lignite-fired power plant and adjoining open-cast lignite mine located in Neyveli, Tamil Nadu. The facility began full commercial operations in December 2002 and is operated by TAQA. TAQA sells the entire capacity of the Neyveli plant to TANGEDCO, the state-owned utility, under a 30-year PPA. TAQA is also responsible for the operation and maintenance of the plant and related facilities.
TAQA also has an interest in Himachal Sorang Power Ltd, the developer of a 100-MW hydropower plant in Himachal Pradesh. TAQA holds a majority stake in the joint venture. The plant, which is expected to begin operations in 2013-2014, will be powered by Sorang Khad, a river originating in the Himalayas. It will supply electricity to the northern states.