India’s Tata Power announced on 17 September that it had sold its 50% stake in power developer Cennergi to Exxaro Resources, its joint venture partner. The shares were held through Tata Power’s wholly owned subsidiary Khopoli Investments. The R1.55bn ($106m) transaction is part of a wider sale of international assets in a drive to reduce the company’s debt. The company has been losing money from its 4GW coal power plant near Mundra in India.
“The decision to monetise this South African asset is in alignment with our stated strategy to deleverage the balance sheet by divesting sub-optimal size international assets,” said Tata Power chief executive and managing director Praveer Sinha. “The proceeds from such sale would be re-invested in emerging areas where there is a huge growth opportunity. The company will focus on renewable power, power distribution and service-led businesses in India which will bring in greater value and help us align with the emerging consumer needs.”
Cennergi was launched in March 2012 as a 50:50 joint venture between Tata Power and Exxaro. In the same year, the company saw two wind projects selected in the second round of South Africa’s renewable energy independent power producer procurement programme and signed 20-year power purchase agreements with national utility Eskom and implementation agreements in May 2013.
134.4MW Amakhala Emoyeni, in which Cennergi holds a 95% stake, began operating in July 2016. The plant uses 56 Nordex 2.4MW N117 wind turbines and Nordex was the engineering, procurement and construction (EPC) contractor as well as being responsible for operations and maintenance. Tsitsikamma Community wind farm is 95.3MW and began commercial operations in August 2016. Cennergi owns 75% of the project, which consists of 31 V112 3.075MW Vestas turbines. Vestas was the EPC contractor and has a 15-year service agreement.
Tata Power is also selling its stake in the 120MW Itezhi-Tezhi hydropower project in Zambia. In an interview with India's Zee Business published on 11 September 2019, Tata Power's chief executive and managing director Praveer Sinha said that the company hoped to finalise the transaction by the end of the financial year.
ABSA Bank advised Khopoli on the transaction.
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