The London stock listed company, Essar Energy PLC, Tuesday announced that its Indian subsidiary, Essar Power Limited made an investment acquisition for a 100% stake in Navabharat Power Pvt Ltd. The investment will see Essar Power Ltd takeover the 2250MW producing company in Orissa.
However, the deal will be undertaken in stages, with Essar announcing that it will take an initial 76% stake and the 26% remainder will be acquired on completion of “certain project milestones.” The 2250MW Navabharat Company is jointly owned by Malaxmi Energy Ventures and Nava Bharat Ventures Ltd. Navabharat reported Tuesday in a statement to the Stock Exchange that it had sold off about 52% of its current shareholding in Navabharat Power. Even though the deal was kept under wraps, it emerged that the other JV partner, Malaxmi sold off 100% of its stake.
Reports over the deal first emerged late in 2009 when Essar Power was speculated to be in talks with Navabharat over a potential takeover. Navabharat Power as well reported that it had gotten approvals and coal linkages, and is currently under construction in Dhenkanal District of Orissa. The 2250MW project is pegged at about $2 billion worth of investment and will be undertaken in two phases split into 1,050 MW and 1,200 MW.
Additionally, the investment as well involves allotment of the Rampia Coal block, estimated at about 112 million metric tons and the 4.7 million metric tons yearly of coal linkage to be undertaken with Coal India Ltd. As it stands, the first phase of the project has attained endorsements that include environment permits and approvals, whereas other approvals such as land acquisition are currently being pursued, the company reported.
Even so, the company expects the project’s first phase to attain financial closure by end of CY2010. Naresh Nayyar, Essar Energy CEO, reiterated that the Navabharat Power project was a major component of Essar’s power phase II development projects and was thus in line with the company’s plans that were disclosed during its IPO.
Nayyar further reiterated that the project is expected to keep Essar on track towards the development of more than 11,000MW of power capacity by end of 2014 in a move to enable the company keep its leading place in the private sector power generation market in India. Essar power has plans that will see it expand its installed capacity to 6,000 MW by end of 2012, with additional three coal-based power plants to be set up in Gujarat.