Jaiprakash Associates to acquire 500 mw Bina project
The deal, if goes through, will mark an end to Bina Power Company’s presence in the merchant power sector. 7 ways to avoid growth traps
By Nevin John & Gaurav Pai, TNN |
MUMBAI: The cement and construction major Jaiprakash Associates (JAL), a part of Jaypee group, is believed to be in talks with the Aditya Birla group to acquire Bina Power (BPC) in Madhya Pradesh. The 500-MW project has been on the backburner since it failed to make headway in late 90s when investments in the domestic power sector hit a trough due to unhealthy state electricity boards across the country.
The group sold Rosa project in UP to Reliance Power in 2006. Rosa has tied up with a consortium of financiers led by IDBI to mobilise Rs 2,162 crore for the first phase of its 1,200 MW power project. The coal-based Bina project will require almost Rs 2,000 crore investment to set up 500-MW plant. Sources said JAL is interested in doubling the capacity to 1,000 MW, if the state government gives necessary approvals. The MP government would be ready to allocate coal blocks for the plant, said sources.
“For the project, the Madhya Pradesh government has acquired land and given all necessary clearances. BPC, the shell company which owns the assets, will be transferred to JAL after the acquisition. The value of the deal would be just the investment already made at the location and the premium,” said sources in the know. Both Birla group and JAL have declined comment on the proposed deal.
“Birla group had carried out feasibility studies for both projects and at last decided to back out as the power business remained an unattractive option. The MP government has discussed the Bina issue with Birlas, but the fate of the project continued to be uncertain.
The acquisition by Jaypee group, India’s largest hydropower producer in the private sector with a generation capacity of 700 MW, is expected to give fresh lease of life to Bina,” said a Mumbai-based analyst.
The group sold Rosa project in UP to Reliance Power in 2006. Rosa has tied up with a consortium of financiers led by IDBI to mobilise Rs 2,162 crore for the first phase of its 1,200 MW power project. The coal-based Bina project will require almost Rs 2,000 crore investment to set up 500-MW plant. Sources said JAL is interested in doubling the capacity to 1,000 MW, if the state government gives necessary approvals. The MP government would be ready to allocate coal blocks for the plant, said sources.
“For the project, the Madhya Pradesh government has acquired land and given all necessary clearances. BPC, the shell company which owns the assets, will be transferred to JAL after the acquisition. The value of the deal would be just the investment already made at the location and the premium,” said sources in the know. Both Birla group and JAL have declined comment on the proposed deal.
“Birla group had carried out feasibility studies for both projects and at last decided to back out as the power business remained an unattractive option. The MP government has discussed the Bina issue with Birlas, but the fate of the project continued to be uncertain.
The acquisition by Jaypee group, India’s largest hydropower producer in the private sector with a generation capacity of 700 MW, is expected to give fresh lease of life to Bina,” said a Mumbai-based analyst.
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