Courtesy: DNA

Hyderabad, May 31:  The Nagarjuna Group has given up control of the Rs 4,300 crore power plant in Mangalore to the Hyderabad-based Lanco Group.

Lanco has picked up 74% equity in the 1,015 mw coal-fired thermal power project that has been hanging fire for a decade now.

Lanco will bring in Rs 962 crore towards its share in the equity over a period of time, Praveer Sinha, chief operating officer, Nagarjuna Group, said.

There had been other suitors, too, for the Nagarjuna Power with the most prominent being the Jindals whose offer was turned down by the group early this year.

According to industry sources others in the line up included Malaysian companies Ranhill Bhd, Genting Bhd, Tenaga National Bhd and Suez Energy of Europe. However, an agreement could not be reached with these parties for various reasons, the sources said.

As to the reason for hiving off the majority stake in the project, which is at an advanced stage of implementation, Sinha said the group, which is also implementing an ambitious 6 million tonnes per annum refinery project at Cuddalore in Tamil Nadu, did not have the requisite funds to put into the power project.

“Therefore it felt it had to offload equity,” he added.

The Cuddalore refinery, which, too, has been under implementation for almost a decade now, is slated to cost Rs 4,500 crore.

L Madhusudhan Rao, chairman, Lanco and Nagarjuna Group chairman K S Raju signed an agreement in Hyderabad formalising the strategic relationship.

The power project will be jointly established by both the companies, with Nagarjuna, which had promoted the project in 1996, as a minority partner with a 26% equity.

The financial closure is slated to be achieved by September 2006 and will go commercial by by 2009, the Lanco group said on Tuesday.

The project is the first independent power project in the country to operate on imported coal but had to go through a lot of initial difficulties on account of environmental objections from the locals and other reasons.

The Nagarjuna Power Corporation Ltd, as the Mangalore project firm is called, has a power purchase agreement with the five electricity supply companies in Karnataka for the off-take of 90% of power from the project, while it has obtained various approvals with a “mega power project” status from the Government of India.

The Lanco Group is currently implementing power project with a total capacity of over 2,000 mw in thermal and hydropower sectors.

The group is also present in other infrastructure development and is currently in the process of setting up an information technology Park in Hyderabad.

Lanco plans to sell 23% in Nagarjuna Power

Courtesy: The Economic Times

New Delhi: Hyderabad-based power and infrastructure major Lanco group, which has acquired a 74% equity stake in Nagarjuna Power Corporation, the 1.015-MW coal-based power project being set up by the Nagarjuna group at Mangalore, plans to offload a 23% stake in the venture to a strategic partner.

Lanco is learnt to have already sounded out some of its foreign partners in its existing power ventures for this. Globaleq of UK, DEG of Germany, Doosan of Korea and Genting of Malaysia are among the foreign partners of Lanco.

The group is also learnt to be in parleys with IFC Washington for a possible equity investment in the Nagarjuna Power venture. “We plan to bring a strategic partner on board in the Nagarjuna Power project. But we will retain the majority stake in the JV,” L Madhusudhan Rao, chairman, Lanco group, told ET.

Sources said it is not necessary that one of Lanco’s existing partners may join Nagarjuna. “Lanco could rope in a new foreign partner in the venture,” a source close to the company said.

The proposed strategic partner is expected to be inducted by September, the date by which Nagarjuna Power is expected to achieve financial closure. Mr Rao, however, said the group is yet to start negotiations for the proposed strategic partner.

Sources said Lanco plans to retain 51% in Nagarjuna Power venture and would offer the remaining 23% out of its 74% stake to the prospective partner. The Nagarjuna group will retain a 26% stake in the project.

Lanco group will be pumping in about Rs 1,000 crore for the 74% stake in the mega power project, being implemented with a debt-equity ratio of 70:30. The total project cost is estimated to be about Rs 4,300 crore.

Lanco has also decided to team up with Globaleq of the UK for bidding for the ultra mega power project (4,000 MW). While the combine has decided to bid for the ultra mega project in Madhya Pradesh, it is yet to take a call on bidding for the one proposed in Gujarat.

In order to focus more on its infrastructure business, the group is also undertaking a major restructuring, under which all its ventures in power, realty and construction are to be brought under a holding firm, to be named Lanco Infratech. Lanco group currently has about 14 firms managing various projects in power, realty, road, water projects and other projects.

The group is also planning to get into civil aviation infrastructure and proposes to bid for new airports, once the new holding company is in place.