Adani buys Lanco’s Udupi power plant for Rs 6,000 cr
- Updated: February 28, 2015
Largest deal in thermal power space; Lanco to use proceeds to lower debt
The Udupi project has power sale agreements with Karnataka to sell 90 per cent of generated power and with Punjab for 10 per cent. But the unit has been facing operational issues that even led to stoppage of production in June, as Rs 1,800 crore of arrears from the Karnataka Electricity Board piled up. Also, Lanco, which was importing Indonesian coal to run the power station via New Mangalore Port, failed to lift the fuel from a ship berthed at the port.
Lanco had put the power plant on the block two years ago, aiming to use the proceeds to lower its consolidated debt (Rs 35,000 crore as of March this year). The company went for a Rs 7,000-crore corporate debt restructuring in December last year, with Rs 2,500 crore as priority loan from lenders.
For the Adani group, this is a big step forward in the power sector. In April this year, the Adani group announced it had become the largest private power producer in India, with an overall installed capacity of 8,620 Mw.
The group, controlled by billionaire Gautam Adani, is planning to concentrate on the Indian infrastructure sector and has put its loss-making coal terminal in Australia for sale at a reported valuation of $2 billion.
In its vision statement, Adani Power, which also operates the 4,620-Mw Mundra ultra mega power plant, has set a goal of achieving 20,000 Mw of operational capacity by 2020.
Lanco’s Udupi plant had also signed an agreement with the state government for a further expansion of 1,320 Mw. The first unit of the plant, with a capacity of 600 Mw, was commissioned in November 2010, while another 600-Mw one in January 2011.