JP Power calls off hydro deal with R-Power

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Jaiprakash Power Ventures, which had been in separate talks with a number of companies to sell its hydropower portfolio, has called off its latest discussion with  Reliance Power, part of the Anil Dhirubhai Ambani Group (ADAG).

In July, R-Power had agreed to buy the hydropower assets of JP Ventures. This was after a consortium led by Abu Dhabi National Energy Co, called off a Rs 9,689-crore plan to buy two of Jaiprakash’s hydropower plants.

It is learnt regulatory uncertainties around the supply rates for JP Power's Karcham Wangtoo unit in Himachal Pradesh have hit the Rs 12,000-crore deal with ADAG. Last week, the Central Electricity Regulatory Commission  had asked JP Power to expedite filing of a rates petition for the 1,091 Mw Karcham Wangtoo project. The direction came after the utility sought withdrawal of a provisional rates petition related to the plant.

MEGA JOLT

• Second blow in two months for Jaypee after Abu Dhabi National Energy Company pulled out of an agreement to acquire two hydropower plants of JPVL 
• Reliance CleanGen signed MoU in July to acquire the entire hydropower portfolio of Jaypee totalling 1,800 Mw with an asset value of Rs 10,000 crore
• Uncertainty on rates and technical issues arise at the 1,000-Mw Karcham Wangtoo project of JPVL in Himachal
• Sources allege Jaypee increased the installed capacity of Karcham Wangtoo  project to 1200 Mw, in violation of CEA approvals and against the techno-economic clearance of 1,000 Mw
• CEA had issued showcause notice to JP to restrict the capacity of the project to 1,000 Mw or face closure of the plant

"Due to prevailing regulatory uncertainties and tariff (rates) issues, which impact valuations, Reliance Power and Jaiprakash Power Ventures (JPVL) have terminated discussions regarding R-Power's acquisition of JPVL's hydro portfolio of three projects with an aggregate capacity of 1,791 Mws," stated ADAG.

It appears a showcause notice will be issued soon by the Central Electricity Authority to JP for breaching the techno-economic clearance (TEC) conditions at Karcham Wangtoo. The project is currently running at 1,200 Mw capacity, against the TEC for 1,000 Mw.

However, JP Power stated discussion with ADAG had been called off "for reasons not attributable to any regulatory uncertainties but due to difference on commercial aspects".

Reliance CleanGen Ltd, a unit of R-Power, had signed an exclusive accord for the acquisition of the entire hydroelectric power portfolio of JP Power. The portfolio comprises three plants—Baspa Stage II (300 Mw) and Karcham Wangtoo (1,091 Mw) in Himachal, and Vishnuprayag (400 Mw) in Uttarakhand. Adani Group was also engaged in talks for acquiring JP Power's hydro projects in a Rs 11,000-crore deal.  

JP Power has a thermal power portfolio of 1,160 Mw, comprising the 500 Mw Bina and 660 Mw Nigrie projects.