Financial Briefs

India and overseas

Government sells 52.63 per cent stake in REC to PFC (India)

The Cabinet Committee on Economic Affairs has accorded in-principle approval for the sale of the government’s 52.63 per cent stake in the Rural Electrification Corporation (REC) to the Power Finance Corporation (PFC) along with transfer of management control. The deal is estimated to raise upto Rs 150 billion for the government. The committee will work out the modalities of the acquisition based on the recommendations submitted by a committee of secretaries and the deal is expected to be completed by the end of 2018-19. PFC is planning to fund the acquisition by borrowing Rs 70 billion from domestic banks. PFC is also likely to moderate its dividend payout as well as disbursements to loan accounts in 2018-19. In addition, PFC expects to receive a special dividend from REC post the acquisition.

NTPC acquires Barauni TPP from BSPGCL

NTPC has announced its acquisition of the 720 MW Barauni thermal power plant in Begusarai district of Bihar from Bihar State Power Generation Company Limited (BSPGCL) with effect from 15 December, 2018. The station has two units of 110 MW capacity each, which are currently under renovation and modernisation apart from two under-construction units of 250 MW each. The transfer has been completed in accordance with the Bihar Power Generation Undertakings Transfer Scheme 2018 notified by the state government on June 27, 2018 and the amendment dated  December 14, 2018.

ADB signs loan agreement for transmission system upgrade in Himachal Pradesh

The union government has signed a $105 billion loan agreement with the Asian Development Bank (ADB) to support transmission system upgrades in Himachal Pradesh for increased supply of hydropower to the state and the national grid. The loan is the third tranche of the multi-tranche financing facility for Himachal Pradesh’s Clean Energy Transmission Investment Program, which was approved by ADB in 2011. It will have a term of 25 years with a grace period of five years, interest rate determined by the London interbank offered rate and a commitment charge of 0.15 per cent.

World Bank signs loan agreement for Jharkhand Power System Improvement Project

The Jharkhand government, the central government and the World Bank have signed a loan agreement worth $310 million for the Jharkhand Power System Improvement Project. The project will help build new power transmission infrastructure and improve the technical efficiency and commercial performance of the state’s power utilities. The loan from the International Bank for Reconstruction and Development has a five-year grace period and a maturity period of 25 years.

NHPC to acquire Lanco Infratech’s Teesta HEP

NHPC Limited will acquire Lanco Infratech’s 500 MW Teesta hydroelectric project (HEP) in Sikkim, for a tentative value of Rs 9 billion. NHPC was declared the highest bidder by the creditor of the debt-laden Lanco Teesta Hydro Power. The takeover is expected to be completed in the next three to four months. The project, which comprises four units of 125 MW each, is currently under construction and is likely to be commissioned in about four years. To initiate the deal, NHPC will provide a bank guarantee of Rs 100 million and the remaining payment will be made after the acquisition is approved by the National Company Law Tribunal.

Sterlite Power’s SPV raises Rs 30 billion via bonds

NRSS XXIX Transmission Limited, a special purpose vehicle (SPV) of Sterlite Power, has raised Rs 30 billion by issuing bonds on a private placement basis for its flagship project in Jammu & Kashmir. The AAA bonds have been fully subscribed on the Bombay Stock Exchange (BSE) bond platform. The NRSS XXIX project, which was commissioned ahead of schedule in October 2018, includes three 400 kV double circuit transmission lines and one 400/220 kV gas-insulated switchgear substation. It has been set up to deliver over 1,000 MW of electricity from Punjab to the Kashmir Valley.

Hitachi Limited agrees to buy ABB’s power grid division (Japan)

Japanese conglomerate Hitachi Limited has agreed to acquire 80.1 per cent stake in ABB’s power grid division at an enterprise value (including net debt) of $11 billion, for about $6.4 billion. ABB will retain the remaining 19.9 per cent stake. Meanwhile, it plans to return proceeds worth $7.8 billion to investors through a buyback or other measures.

Pertamia achieves financial closure of gas-fired power station (Indonesia)

Pertamia Power Indonesia has achieved financial closure of a $1.8 billion integrated gas-fired power station project in Cilamaya, West Java province, with its Japanese partners Marubeni and Sojitz. The consortium of lenders for the project includes the Japan Bank for International Cooperation, Nippon Export and Investment Insurance Company Limited, the Asian Development Bank, Mizuho Bank, MUFG Bank, and Overseas Chinese Banking Corporation. The project includes the 1,760 MW Jawa 1 combined cycle power station and a floating storage and regasification unit. It is targeted to begin commercial operation in end-2021.

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