Tuesday, February 18, 2014

EDF in talks to buy GMR stake in Upper Karnali Hydropower project

French government-owned power utility Electricite de France SA (EDF) is planning to buy stake of GMR's hydropower project in Nepal.
The EDF is currently in talks with Bangalore-based infrastructure conglomerate GMR Group to acquire a stake in 900-megawatt (MW) Upper Karnali hydropower project, according to the French company that confirmed EDF's interest in acquiring stake in the hydel project.
The GMR will still be lead investor in the hydropower project as the EDF will have less than 51 per cent stake.
Though the value of the possible deal is not confirmed, the EDF’s interest in the Indian energy sector has been reflected by its earlier investment in ACME Solar Energy.
EDF’s renewable energy arm and EREN, another French company, plans to invest a total of Rs 8.80 billion in New Delhi-based ACME Solar to set up solar power plants in India.
As the GMR Group has previously articulated its 'asset light, asset right' policy to 'develop, build, create value, divest and reinvest', the deal looks possible, the company added.
The group has sold several of its power, road and airport projects. GMR has 15 power generation projects, of which eight are operational and seven are being built. It also has nine road projects, of which seven are operational.
GMR Infrastructure had a total stand-alone debt of Rs 6.52 billion. The group’s consolidated debt stands at 642.22 billion as of September 30.
GMR Infrastructure’s loss widened to Rs 7.05 billion in the quarter that ended in December compared with a loss of Rs 3.47 billion a year ago and Rs 6.28 billion in the preceding quarter.
GMR Group today said that it had sold a 74 per cent stake in GMR Ulundurpet Expressways to India Infrastructure Fund of IDFC in a deal that releases capital to the tune of Rs 3.16 billion and reduces debt on its books by Rs 7.20 billion.
As executing a hydropower project is a time-consuming, costly and tedious process that includes a thorough survey and investigation, preparation of a detailed project report, relocation and resettlement of the affected population and infrastructure development, the GMR changed its policy to 'asset light, asset right'.
A consortium comprising GMR Energy and Italian-Thai Development Public Company (ITD) is developing the 900-MW Upper Karnali hydropower project on Karnali river on build, own, operate and transfer (BOOT) model.
While the country is suffering 12 hours scheduled load shedding everyday, most of the investors, mostly Indian investors, have been interested in developing hydropower, also due to its huge untapped potential, but prolonged political transition has delayed the projects.

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