NEW DELHI: NTPCNSE 1.85 % has outbid the Adani Group for the Avantha Group’s 600 MW Jhabua power plant in Madhya Pradesh, with a Rs 1,900-crore offer that was two and-a-half times more than the rival bid, people in the know said. State-run NTPC’s offer is also the highest on a per-megawatt basis so far to buy out a stressed asset in the power sector. The thermal power producer undergoing bankruptcy proceedings owes more than Rs 5,000 crore to lenders, who could recover 38% of their loans if they accept the NTPC offer.
Experts said this could encourage banks to approach the National Company Law Tribunal (NCLT) for debt resolution, as the valuation was better than other recent deals happened for stressed power assets outside the bankruptcy court. Currently, banks go to the NCLT as a last resort, after exhausting all resolution options due to fear of large haircuts.
The people said Jhabua received a good bid as it was an operational project built with equipment from Bharat Heavy Electricals, but stressed due to lack of working capital. NTPC’s bid values the unit at Rs 3.2 crore per MW against the construction cost of Rs 6 crore for new projects. Adani Power had valued it at about Rs 750 crore, or Rs 1.25 crore per MW, the people said. NTPC and AdaniNSE 0.42 % Power did not respond to emails seeking comment until press time Monday.
Shares of NTPC closed 0.34% down at Rs 118.90 on Monday on the BSE, while those of Adani Power ended 4.9% down at Rs 60.15. This is the first time that the staterun power producer has bid for any stressed project. It had earlier decided against buying any stressed projects outside the Insolvency and Bankruptcy Code (IBC). Its offer was better than the deals for power plants done outside the IBC, including Adani Power’s buyout of the GMR Chhattisgarh plant and Resurgent Power’s acquisition of Jaiprakash Associates Prayagraj Power Generation unit. Adani Power had won GMR Infrastructure’s 1,370 MW coal-based power plant in Chhattisgarh, by offering to take over its debt at Rs 3,530 crore, or Rs 2.58 crore per MW. It paid a nominal Rs 1 for the equity component.
Tata Power-backed Resurgent Power paid about Rs 6,000 crore, or a little over Rs 3 crore per MW, for the 1,980 MW PPGCL power plant in Uttar Pradesh. Hong Kong-based Agritrade Resources bought SKS Power’s 1,200 MW Binjkote power plant for Rs 2,170 crore, valuing it at Rs 1.8 crore per MW. The Jhabua plant faced land acquisition and funding issues leading to time and cost overruns. Banks and financial institutions are trying to close resolution proceedings for at least five stressed power plants including Essar Power Mahan, RKM Power-Gen and Suzlon Energy, even as the January first week deadline as per the central bank’s Prudential Framework for resolution of stressed assets has passed. The lenders aim to close the deals for these projects outside the IBC by March this year.
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