The Subhash Chandra-led Essel Group is in talks with Adani Transmission and Tata Power to sell its under-construction Warora-Kurnool transmission line in an attempt to lower debt, two people familiar with the company’s plans said.
The talks are at an initial stage and a deal depends on various factors including valuations, state of the project and how much haircut lenders are willing to take, these people said.
Essel Infraprojects did not reply to an email seeking comment. Adani Transmission and Tata Power also did not respond to emails seeking comment.
The Warora-Kurnool transmission line was the biggest inter-regional transmission project awarded under inter-state tariff-based competitive bidding in July 2016. The 765 kV project, which included laying of transmission lines in central India from Warora in Maharashtra and Kurnool in Andhra Pradesh, was supposed to facilitate distribution of power to the southern region. However, it has been hit by delays as the timeline for the scheduled commissioning of the project is past its November 2019 deadline.
In June last year, Essel Infraprojects had sold two transmission assets namely, Darbhanga-Motihari Transmission and NRSS XXXI (B) Transmission, to Edelweiss Infrastructure Yield Plus Fund. That agreement had given Edelweiss the right to purchase two other transmission assets owned by Essel, the Warora-Kurnool Transmission and NRSS XXXVI Transmission. However, Edelweiss is no longer interested in these projects because of the delays in execution.
“Essel has been looking for a buyer for these projects for sometime now. Edelweiss is no longer interested, so the company is scouting for other buyers and is presently in touch with Adani and Tata groups,” said one of the two persons cited above. “The Warora-Kurnool line is a big project but it is delayed for a long time. In fact, in the last nine months, there has been no progress in the construction, which has made it difficult to find a buyer.”
YES Bank and PTC India Financial Services are the lenders to the project, but it is unclear as to how much the company has borrowed out of the Rs 4,000 crore sanctioned to the Warora-Kurnool project.
The lenders are also keen that the project should be taken over by a more capable company, which can invest to complete the project.
The transmission line covers the districts of Warora, Warangal, Hyderabad, Kurnool and Chilakaluripeta with a sub station at Warangal. The initial contract period for the project was 35 years post commissioning of the project. It is also unclear whether the delays in commissioning will lead to any changes in the contract.
For Adani and Tata, the acquisition could quicken their expansion in the country. Adani Transmission is currently the largest private transmission company operating more than 11,000 ckt km of transmission lines and around 18,000 MVA of power transformation capacity. While Tata Power has more than 1,125 ckt km of transmission network in Mumbai, its sister company Tata Projects, has laid more than 13,000 km of power transmission lines since its inception.
Source: Economic Times