Sembcorp Industries, through its wholly-owned subsidiary, has signed a conditional agreement to acquire 45% of NCC Power Projects (NCCPP), a company involved in the development of the 1,320MW coal-based thermal power project in the Nellore district of Andhra Pradesh, India.
Sembcorp’s investment for the stake will amount to approximately INR8.5bn (around $175m). The transaction, which is subject to the fulfilment of conditions precedent, including approvals from the relevant authorities and the lenders, allows Sembcorp to double its power generation capacity in India.
Currently, NCCPP is jointly owned by Gayatri Energy Ventures and NCC Infrastructure Holdings (NCCIHL). Through the new transaction, Sembcorp will have 45% of NCCPP and the remaining 55% by NCCIHL.
Sembcorp president and CEO Tang Kin Fei noted with the company’s first power project in India progressing well and on track for completion in 2014, the company is now pleased to embark on its second power plant investment there.
Fei said, "This acquisition will provide the opportunity for Sembcorp to increase our foothold in India’s power market, where we see opportunities for our business to grow significantly in the years to come.
"The NCCPP project’s close proximity to TPCIL will also allow us to realise operational synergies, such as the use of common coal importation and logistics infrastructure and the same Sembcorp management team."
By using supercritical technology, the NCCPP power plant allows for enhanced efficiency and reduced emissions when compared to other conventional plants.
Approximately 30% of the construction work has been completed at the power project. The project, which will run on both domestic and imported coal, is expected to begin operations in early 2016.
NCCPP has completed piling and foundation works in key areas and has begun structural work for the boilers at the power plant. The project has already secured financing and received a letter of allocation for its domestic coal supply from Coal India.
Gayatri Energy Ventures is Sembcorp’s project partner for the Thermal Powertech Corporation India (TCPIL) plant. Approximately 80% of the construction work has been completed at the TPCIL plant.
Additional conditional agreements would also be entered into giving Sembcorp the right and obligation to take an incremental 20% stake in NCCPP, while an incremental 16% stake in TPCIL respectively.
The TPCIL project is on track to start testing and commissioning of its first 660MW unit from the second quarter of 2014. Commercial operations of the first unit are set to commence in the third quarter of 2014.
The second 660MW unit at the TPCIL project is expected to come online by the end of the 2014.