With an eye on its generation capacity target of 26,000 MW by 2020, Tata Power announced on Wednesday that it had signed a share purchase agreement to buy Ideal Energy Projects’ 540 MW thermal power plant near Bela, in eastern Maharashtra.
After the deal, Tata Power’s operational capacity would stand at 8,885 MW, narrowing the gap between the company and India’s largest privately held power generation company, which has a capacity of 9,280 MW.
Tata Power said in a statement that 270 MW of the 540 MW plant was commissioned in May 2013, and it was fueled by domestic coal. The plant does not have a power purchase agreement and works on merchant power, says Ideal Energy’s chairman and managing director, Jayant Mhaiskar.
Analysts say while the cost of building a thermal power plant is around Rs 4.5 crore per MW, it would be incorrect to value the deal on that basis as the plant was partly commissioned.
Ideal Energy’s RoC filings show the company was under corporate debt restructuring. However Mhaiskar said the plant’s sale was not part of the CDR process, but part of the group’s strategy.
India’s power sector has witnessed four deals since the start of 2014, with cumulative deal value exceeding Rs 20,000 crore. Analysts
say the sector will continue to witness widespread consolidation.