TAQA to buy JP Power's 2 hydel plants for Rs 3,820 cr

Plants 35 kilometres from Sorang hydroelectric plant, in which TAQA acquired astake last year

Abu Dhabibased energy and water company TAQA led consortium has announced itsacquisition of two hydroelectric power plants of Jaiprakash Power Ventures forabout Rs 3,820 crore ($616 million).

In a press statement issued today thecompany said TAQA, which holds a 51% stake in the consortium, will havecontrol of operations and management of both facilities under the proposeddeal.

The remaining equity will be held by one of Canada's largestinstitutional investors -39% and IDFC Alternatives' IndiaInfrastructure Fund II-10%.

Theagreement follows the signing of the UAE-India Bilateral Investment Promotionand Protection Agreement in December 2013. At the first High Level Joint Task Force onInvestments meeting between the two countries held in February 2013 UAE hadagreed to invest $2 billion in India's infrastructure sector. The consortium will also acquire the assets'non-recourse project debt.

"India'seconomic growth depends on having ample and reliable energy supply. TAQA ispleased to add these two high quality hydro power assets to our growing Indiabusiness and to support India's economic growth," said Frank Perez, ExecutiveOfficer and Head of Global Power and Water, TAQA.

The tw oplants have a combined power generation capacity of 1,391 megawatts (MW). Both arelocated in Kinnaur district within two kilometres of each other and sharesupport facilities. They use run-of-the-river technology to convert naturalwater flow to electricity, eliminating the need for a reservoir.

The plants are 35 kilometres from the Sorang hydroelectric plant, in which TAQA acquired astake last year. With the completionof this transaction, TAQA's gross operational power generation capacity inIndia will total 1,741 MW, comprised of three hydroelectric facilities and onelignite power plant.

This would make the company the largest private operatorof hydroelectric plants in India. The deal,part of the Jaypee Group's plan to cut Rs 60,000-crore debt, follows months ofnegotiations. Last year, Executive Chairman Manoj Gaur had said the groupplanned to cut its debt by Rs 15,000 crore through the sale of assets.

JPVL hasa debt of Rs 19,000 crore.Theacquisition is expected to close in 2014 and is subject to regulatory and thirdparty approvals.

"This investment will be recognised at the second meeting ofthe UAE-India High Level Joint Task Force in Mumbai on March 3, 2014 co-chairedby Sheikh Hamed bin Zayed Al Nahyan, Chairman of the Abu Dhabi Crown PrinceCourt, and Anand Sharma, India's Minister of Commerce and Industry," thecompany said.