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Navayuga Power, a unit of CVR Group that operates the largest private port on India's east coast, is in talks with several global power producers and equipment makers to sell a significant stake in its power assets.
Navayuga is in the process of setting up a 1,980 Mw coal-fired supercritical power project at Krishnapatnam, near the CVR Group's all weather, deep water port in Andhra Pradesh's Nellore district.
The proposed project has already achieved key milestones such as land acquisition and public hearing for environmental clearances, besides entering into a power purchase agreement of substantial capacity with the Uttar Pradesh power utility.
"Navayuga Power management is now in talks with several global companies including Toshiba, Sumitomo, Mitsubishi and GDF Suez to sell significant equity stake, ranging from substantial minority of 49 per cent to a majority stake of 51 per cent," said a person with direct knowledge of the talks. "The potential value of the transaction could be Rs 1,380 crore to Rs 1,440 crore," he said.
Navayuga Power director Chinta Sasidhar told ET that the conglomerate was looking at strategic partners but refused to divulge the names of potential partners or the exact stake it was looking to sell. "We are open to selling majority stake, if necessary, based on the partner's strengths in terms of technology. e are looking for a partner who can bring in sound technology for the supercritical thermal power project along with appropriate investments," Sasidhar said.
The power project coming up near the Krishnapatnam port will have 1,320 Mw of capacity in the first phase and add 660 Mw in the second phase. It involves a total investment of Rs 9,400 crore. Having tied-up with the UP power utility for 85 per cent of capacity, the company plans to sell the balance in the open market. We are looking for a partner who can bring in sound technology for the supercritical thermal power project along with appropriate investments," Sasidhar said.
The power project coming up near the Krishnapatnam port will have 1,320 Mw of capacity in the first phase and add 660 Mw in the second phase. It involves a total investment of Rs 9,400 crore. Having tied-up with the UP power utility for 85 per cent of capacity, the company plans to sell the balance in the open market. Sasidhar said the company hopes to seal the deal for equity sale over the next 3-4 months and execute the first phase of project by 2018-19.
While Sasidhar refused to divulge details of negotiations on valuations, a merchant banker who was associated with one of the potential partners involved in talks with Navayuga said, "Navayuga Power will find it difficult to seek premium given the fact that it its yet to secure fuel supplies and financial closure for the project".
A representative of Sumitomo refused comment. Toshiba did not respond. A GDF Suez spokesperson said "India is an interesting market for the group" but refused to confirm talks with Navayuga Power, saying, "We do not comment on upcoming potential projects or bids".
The merchant banker quoted above said "Though the project of Navayuga Power has certain advantages in terms of land acquisition and proximity to seaport for coal imports, apart from power purchase agreements, stake sale deal with foreign partner is not progressing as anticipated since the company is yet to secure fuel supplies in terms of agreements with overseas coal firms".
Sasidhar said talks with a few coal asset owners in Indonesia, Australia and Africa are progressing and the company hopes to firm up fuel supply arrangements at the earliest.
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