JSW Energy, Tatas eye GMR's Emco plant

GMR had bought the 600 Mw plan from Emco in 2009 while it was under construction

Power utilities such as JSW Energy and Tata Power are known to be evaluating GMR’s Emco power plant in Maharashtra for a possible buyout.

In 2009, GMR had bought the 600-Mw power plant from Emco, while the plant was being constructed. Now, the plant is operational and GMR is known to be expecting a premium on the purchase.

Responding to questionnaires on the development, GMR said it didn’t comment on speculation. “We maintain we are evaluating various options to create shareholder value,” Tata Power said in a response.

Earlier, JSW Energy had been talking about purchasing power projects and had actively looked at the assets of Lanco Infratech. “As a policy, we don’t comment on market speculations and rumours,” JSW Energy said in response to the questionnaire.

Some of the interested parties insist they won’t pay a heavy premium for the project. “It is a good asset and has coal supply tied up, but some of the power under power purchase agreements (PPA) don’t have a very attractive rate. So, if a premium is paid, there isn’t much money to be made,” said one of the bidders evaluating the project.

Apart from Indian players, international utilities such as Malaysian giant Genting and Singapore’s Sembcorp, which already have interests in India, are known to be eyeing the project.

“The sale of power projects have started progressing now,” said an analyst.

The Emco power project has already signed fuel supply agreements with South Eastern Coalfields, a subsidiary of Coal India. It also has all its power tied up in long-term agreements. The project is selling 200 Mw of power to Maharashtra State Electricity Distribution Company at Rs 2.9 a unit. However, power purchase agreements for the remaining power have a much higher rate. It has a 15-year agreement to sell 200 Mw to Dadra Nagar Haveli at Rs 4.6 a unit, as well as a seven-year agreement with Tamil Nadu Electricity Board to sell power at Rs 4.9 a unit.

While the first unit of the project went on stream in March this year, the second went on stream in August. Emco Energy is the GMR group’s first coal-based power plant to commence commercial generation. It has as much as 2,136 Mw of operational capacity. The company is also setting up additional capacity of 5,038 Mw.