The Hindu Business Line : BPL in talks to exit AP power project

THE TPG Nambiar family managed BPL Group said it is in talks with strategic investors to exit the 510-MW Ramagundam power project in Andhra Pradesh even as the deadline for achieving financial closure lapsed on July 7. It is in tune with BPL's strategy to move out of non-core businesses to focus on consumer durables, especially colour televisions.

Speaking to Business Line, Mr Ajit Nambiar, Chairman & Managing Director of BPL Ltd, confirmed the group was mulling exit from one of the country's first private independent power projects. "We are in talks with various strategic investors for sale of the power project," Mr Nambiar said, but did not divulge more details on the same. The statement officially confirms that BPL is looking for an exit route from the project, which has been a matter of speculation for a while.

While replying to a related query about divesting from non-core areas, the BPL Chairman said the promoters — he and his father, Mr T.P.G. Nambiar — were not exiting BPL Mobile `at present.' BPL is the cellular service provider in Mumbai, Tamil Nadu and Kerala circles.

The power purchase agreement (PPA) between BPL and the erstwhile APSEB was entered into on October 31, 1994, and was amended twice. BPL commenced work in May 1999 and stopped it in July 2001, as it was not able to generate funds required for the project from its lending financial institutions.

The equity holding by the group is to the extent of 37 per cent by the promoters directly and through some of the group companies. Another 26 per cent is held by Mauritius-based Wellesley Investments, in which BPL is the major equity holder. While another 26 per cent would be held by engineering procurement and construction contractors, Marubeni of Japan, the remaining 11 per cent would be held by the operation and maintenance contractor, Power Development Corporation, Japan.

Meanwhile, the Andhra Pradesh Finance Minister, Mr K. Rosaiah, had assured the State Assembly in June that the Government will have the project executed by APGenco or some other agency in case BPL backed out. He said the Government and the Transmission Corporation (Transco) had fulfilled the necessary requirements for BPL to achieve financial closure, which they had failed to meet so far.

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