Taqa pulls out from deal to buy two JP Power plants in Himachal
24 Jul 2014
Jaiprakash Power Ventures Ltd (JP Power) today said that Taqa India Power Ventures, an arm of Abu Dhabi National Energy Co PJSC, is withdrawing from the agreement to purchase two hydropower plants owned by Jaiprakash in the mountain state of Himachal Pradesh.
In a filing with the Bombay Stock Exchange, Jaiprakash Power said Taqa was citing a change in its business strategy for the withdrawal; and the Abu Dhabi company is liable to pay a break fee under the deal agreement.
''Taqa has informed us that they will be withdrawing from the acquisition transactions as defined in the acquisition agreement dated 1 March 2014 entered into between JP Power and Taqa. They have also stated that they have been constrained to take the said decision as a result of a change in the business strategy and priorities of their group,'' Jaiprakash Power said.
A consortium led by Taqa, which means energy in Arabic, agreed to buy the 1,000 MW Karcham Wangtoo and 300MW Baspa II hydroelectric power plants from Jaypee in March in a deal that would have enabled the group to repay some of its debt. The transaction was also seen as helping hasten consolidation in India's power sector, burdened by debt, delays in project approvals and fuel shortages.
The other investors in the consortium included Canada's Public Sector Pension Investment Board and IDFC Alternatives Ltd, the private equity arm of infrastructure finance company IDFC Ltd.
Taqa already has a presence in Himachal Pradesh, holding a majority stake in NCC Ltd's power plant there. It also operates a 250MW lignite-based power plant in the Neyveli region of Tamil Nadu and plans to scale it up to 500MW.
The two plants are located on the banks of the river Satlej and its tributaries, which eventually flow into Pakistan. The Baspa project site is located on the river Baspa, a tributary of Satluj in Kinnaur district.
The second project's reach is between Karcham and Wangtoo villages and is envisaged as a run-of-the-river development on the Satlej.