Tata Power Company is set to acquire the proposed 330 Mw hydropower project in Uttaranchal from the promoters, Voith Siemens Hydro Power Generation.

The Tata group company was in advance talks with the US subsidiary of Voith Siemens of Germany for acquiring a controlling interest in the project, sources involved in the discussions said. The Tata Power board will meet soon to approve the deal.

"The two sides have been negotiating for some time, and a final decision will be taken soon after the Tata Power board discusses the issue threadbare. If it goes through, the deal size, including the cost of setting up the power plant, could be around Rs 2,000 crore (Rs 20 billion), making it one of the largest acquisitions in the power sector," a source said.

Tata Power Company executives were unavailable for comment. The Voith Power group holds around a 95 per cent stake in the project, while the remaining equity is held by the G P Goenka-promoted Duncan group.

The project was conceived in Uttar Pradesh, and a power purchase agreement was signed with the state electricity board. The bifurcation of the state, however, saw the project site landing in Uttaranchal.

This, coupled with the confusion in the power policy, resulted in hardly any construction taking place.

The project is now an attractive buy for Tata Power because all the relevant clearances from the state government are in place.

Tata Power will have to pump in around Rs 1,300 crore (Rs 13 billion) for developing the project, which will be used to wheel power to its distribution areas in New Delhi.

Tata Power acquired the rights to distribute power to around 800,000 consumers in north-west Delhi as part of the privatisation of the Delhi Vidyut Board last year. Further, it has incorporated a company called North Delhi Power for this purpose.

Tata Power has experience in generating and supplying hydroelectricity. It has 447 Mw of hydroelectricity generating stations at Bhira, Bhivpuri and Khopoli in Maharashtra for supplying power to its licensed areas in Mumbai. Around 24 Mw of the replacement unit at the Khopoli plant was set up with the help of Voith Siemens.

The German company has been playing a major role in India as far as hydroelectricity generation is concerned.

It has been selected in a consortium with Jaiprakash Industries to build a 520 Mw hydroelectric station at Omkareshwar in Madhya Pradesh.

It is also associated with the construction of several other major hydroelectric projects in India, including the 900 Mw Baglihar project near Jammu, and the renovation of the 64 Mw Hirakud station in Orissa.