Reliance Power walks out of Rs 10,000 cr hydro projects deal with Jaiprakash Group

Written by Subhash Narayan | New Delhi | Updated: Sep 25 2014, 03:36am hrs
Hydro projects(Suggestive image) Reliance Power has shelved its plan buy 1800 MW hydroelectric power assets from Manoj Gaur led Jaypee Group. Reuters
Anil Ambani-led Reliance Power has shelved its plan buy 1800 MW hydroelectric power assets fromManoj Gaur led Jaypee Group worth over Rs 10,000 crore citing uncertain regulatory environment in the country and tariff related issues thereby putting a lid one of the country's largest M&A deal in infrastructure and power sector.

Due to prevailing regulatory uncertainties and tariff issues, which impact valuations, Reliance Power and Jaiprakash Power Ventures Limited (JVPL) have terminated discussions regarding Reliance Power's acquisition of JVPL's Hydro portfolio of three projects with an aggregate capacity of 1,791 MWs, a Reliance Power spokesperson said in a media statement.

Reliance Power remains committed to delivering sustainable long term share holder value through its operating growth strategies, the statement added.

Reliance Power through its subsidiary Reliance CleanGen (RCL) had signed a MoU with JVPL in late July for the 100% acquisition by RCL of the entire hydroelectric power portfolio of JPVL. After the deal, Reliance Power would have become one of the largest provider of hydroelectric power in India's private sector with 7,800 MW operating capacity by end of FY15. Reliance Power has its own hydro electric power projects aggregating over 5,000 MW, however, all under development.

JPVL projects to be bought by Reliance Power included run-of-the-river hydro projects 300 MW Baspa stage two plant in Kinnaur, Himachal Pradesh; 400 MW Vishnuprayagn plant Chamoli District, Uttarakhand and 1091 MW Karcham Wangtoo plant in Himachal Pradesh.

In a separate regulatory filing on the BSE, JVPL said that it has shelved the proposal to hive off two of its hydel projects -- Karcham Wangtoo and Baspa II -- into two separate wholly-owned subsidiaries. This was required for transfer of the asset to Relaince Power.

"The draft Scheme of Arrangement for hiving off Baspa-II and Karcham Wangtoo Hydro Electric projects of the company to two separate wholly owned subsidiaries... has been dropped," JPVL said in a regulatory filing today.

The deal would have helped Jaypee Group to reduce its outstanding debt, and thereby deleverage its consolidated balance sheet. The group had sold its two hydro power projects in Kinnaur district to a consortium led by Abu Dhabi National Energy Company PJSC (TAQA), the international energy and water company from Abu Dhabi, for Rs 10500 crore, but even that deal could not reach its logical conclusion.