Power giant NTPC on big acquisition drive

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Company in talks with L&T, GMR, JP Power, Shapoorji to pick up coal-fired plants

Power giant NTPC on big acquisition drive
NTPC is in talks with private players such as Larsen & Toubro, GMR Group, JP Power and Shapoorji Pallonji Group to acquire some of their power projects as part of a strategy to increase its thermal power capacity by 23,000 mw till 2017.

India’s largest power producer is seeking to acquire assets locally as well as abroad and has invited expression of interest from companies to buy out projects that are dependent on either domestic or imported coal.

People close to the development told Financial Chronicle that NTPC was involved in due diligence of L&T’s 1,400 mw Rajpura power plant in Punjab, where the two units are believed to have been commissioned ahead of schedule. This is the only thermal power plant developed by L&T Power Development. L&T is planning to exit the project, which was originally planned as three units of 700 mw each, but the firm finally settled for two.

The public sector power producer is also evaluating GMR Infrastructure’s 600 mw Warora power project in Nagpur, Jaiprakash Power’s Bina project, which JP had acquired from the Aditya Birla Group, and an unidentified project owned by the Shapoorji Pallonji Group, one of the officials said.

All the four projects under due diligence by NTPC can together bring in 3,300 mw capacity. When contacted, NTPC, L&T and GMR officials declined to comment on what they called ‘speculation’.

The economic slowdown and lack of adequate fuel linkages have forced many companies to go for secondary sale of power projects, while some companies are looking to exit good projects as part of investment. According to one estimate, capacities between 25,000 mw and 30,000 mw are up for sale.

An official involved in the due diligence process said NTPC is restless to close the deals soon enough as it does not have a structured mechanism for acquisition of assets.

The firm has been growing organically all along and has only now become aggressive to acquire assets that meet its standards. Besides, the company is also keen on projects that have not taken off due to land issues, as it can buy land cheap and get early clearances.

The NTPC spokesperson declined comment on the development, but said the company was putting in place the basic structure for acquisitions after it formally floated a tender last week to invite expression of interest from companies and other interested parties looking to sell power projects.

NTPC has an installed capacity of 42,464 mw, while another 20,000 mw is under various stages of implementation. The company is aggressively looking to acquire projects that have either been commissioned or are under-construction in India or abroad. The tender inviting expression of interest said the firm was keen on buying assets from state electricity boards, independent power producers, generation companies, power plant developers or captive power producers.

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