United Arab Emirates-based Abu Dhabi National Energy (Taqa) has reportedly withdrawn from a $1.6bn agreement to acquire two hydropower plants from India's Jaiprakash Power Ventures, a part of the Jaypee Group.
In March 2014, Taqa-led consortium has agreed to purchase the Baspa Stage II and Karcham Wangtoo hydroelectric plants in Himachal Pradesh, India from Jaiprakash Power Ventures.
Hindu Business Line quoted Jaypee Group senior official as saying that Taqa has pulled out of the acquisition deal as a result of a change in business strategy and priorities and will now pay a penalty of $9m to Jaiprakash Power.
Jaypee Group executive chairman Manoj Gaur told Indo Asian News Service (IANS): "It is unfortunate that the Abu Dhabi based company Taqa has decided to undo its agreement with Jaiprakash Power Ventures to buy 1,000MW Karcham Wangtoo and 300MW Baspa II projects due to a change in their business strategy and priorities.
"This will, however, not impact our Group's commitment to reduce debt to Rs.45,000 by March 2015. We have created valuable assets and we are confident to get investors to help us raise funds in the near future."
The acquisition of the two plants, which have a combined power generation capacity of 1,391MW, was part of a commitment made by the UAE to invest $2bn in India's infrastructure sector in February 2013.
The agreement involved TAQA, which holds a 51% stake in the consortium, to have control of operations and management of both facilities under the agreement, while PSP Investments and IDFC Alternatives' India Infrastructure Fund II to hold the remaining equity of 39% and 10% respectively.