October 12, 2008

Adani Group eying Brakel stake in Himachal hydro projects

It is reported that the Netherlands based Brakel Corporation NV is in talks with various parties, including the Adani Group, for inducting a strategic partner for the 960 MW Jangi Thopan and Thopan Powari twin hydro electric projects in Himachal Pradesh. A project of this size attracts a valuation of more than INR 4,000 crore when it goes operational.

Sources in the Adani Group said they would like to pick up a stake in the project after the ongoing litigation over these projects is resolved.

Adani Group is adopting a wait and watch strategy since the Jangi Thopan and Thopan Powari project is facing turbulence due to default by Brakel in paying the premium of INR 173 crore to the Himachal Pradesh government. After a delay of more than 2 years, the premium amount was paid recently after the state government served a notice on the Dutch company, threatening to scrap the award of the project. Apart from the delay in paying the premium, the state government has also accused Brakel of keeping it in the dark about Brakel Kinnaur Power, a company formed by Brakel for implementing the project.

The principal secretary of Himachal power department has, in a recent missive, asked Brakel to disclose its source of funds and submit details about directors, paid up capital and shareholding pattern. The balance sheet and audited accounts of the company for the past 3 years has also been summoned. Officials of the state government feel that Brakel may be inducting a partner through the back door without informing the Himachal government. The company, on its part, has said the funds deposited with the state government have been raised as equity bridge financing.

According to rules laid down by the Himachal Pradesh government, Brakel can offload up to 49% stake in the twin projects but only after obtaining prior permission from the state government.