Nagarjuna Construction to sell 49% in power plant

After Gayatri Projects, another Hyderabad-based company is looking to divest stake in a power project.

Nagarjuna Construction (NCC) plans to sell 49% equity in its flagship thermal power project, coming up at Sompeta in Srikakulam district of Andhra Pradesh, to a strategic partner.

“We are talking to some potential partners to give away 49% stake. Details are still being worked out,” a company official told DNA Money.

Notably, Gayatri Projects recently inducted Singapore-based Sembcorp as a strategic partner for one of its thermal power projects coming up in Andhra Pradesh.

The 2,640 mw (4X660 mw) Nagarjuna Construction project is estimated to cost Rs 12,000 crore. The first phase, with a capacity of 1,320 mw, would cost about Rs 7,000 crore.   The company plans to have a debt-equity ratio of 3:1.

Based on this, the equity requirement would be around Rs 1,750 crore for the first phase.

“We will offer about 49% of the equity and keep the majority equity with us. The debt is being secured through loans from institutions including the Rural Electrification Corporation and the Power Finance Corporation,” the official said.

The company plans to sell the power in the open market on a merchant basis.

According to sources, it would take another month for the company to achieve financial closure and about 45 months from the date of financial closure for the unit to become operational. The power project is being executed by NCC Power Projects Ltd, which is a subsidiary of NCC apart from NCC Urban, which focuses on urban infrastructure.

The company is looking at a land bank of 1,890 acres in total for various requirements including meeting the statutory green belt development. It is estimated to have about 1,200 acres already available with it, while the remaining land is still being acquired.

The company has tied the coal linkage for the plant with Mahanadi Coalfields and South Eastern Coalfields. “The plant’s location is closer to Mahanadi. We can also use the sea route to import coal since the government has allowed us to import about 30% of the coal required for the plant,” the source said.