Malaysia's Genting Group has entered the Indian power sector by picking up a 30 per cent stake in Lanco Kondapalli Power by buying out US company NRG Energy for $27.5 million.
The total consideration also includes picking up a 74 per cent stake in the operations and maintenance contractor of the Kondapalli power project, Eastern Generation Services.
NRG Energy is embroiled in huge financial problems and is trying to get its act together by selling various assets.
"The deal has been struck recently and we have already given the nod for the stake transfer," senior institutional sources said.
Genting has picked up the stake in the Kondapalli project as part of a strategic decision to focus on Asia. Apart from India, the company is also focusing on the Chinese market.
The group had been looking at various opportunities in India for sometime and finally zeroed in on the Kondapalli project.
NRG Energy's stake in Kondapalli was held through its wholly owned subsidiary, WEB Energy. The deal was structured in a complex way that resulted in the transfer of the NRG group's entire shareholding in WEB Energy and Eastern Generation Services to the Malaysian group for $27.5 million.
Lanco Kondapalli at present owns and operates a 368 mw, combined cycle, gas fired power plant at Hyderabad in Andhra Pradesh. The project is one of the few success stories of the Indian power sector in the nineties.
The story of the Indian power sector of the nineties was largely that of projects not getting off the ground due to lack of clarity in government policy and the poor financial health of the state electricity boards.
The passage of the Electricity Act, 2003 promises to change all that.
The Act makes reforms of the state electricity boards compulsory and is an umbrella legislation that replaces a number of other laws governing the power sector.
This is expected to significantly reduce confusion on policy issues and also signal a firm political will for reforming the troubled sector.
