The Hindu Business Line : El Paso sells stake in PPN Power to promoter

EL PASO Energy Corporation of the US has sold 26 per cent stake in PPN Power Generating Co Ltd to Apollo Infrastructure Projects Finance Company, the project's promoter.

The price at which El Paso sold its stake is not known.

PPN Power Generating Co operates a 330-MW combined cycle naphtha-fired power plant at Pillaiperumalnallur in Tamil Nadu.

According to information available on El Paso Energy Corporation's annual report for 2004, the company sold its investment in the project in the first quarter of 2005.

With this, Apollo Infrastructure Project Finance Company's stake in the project goes up to 54 per cent. The other stakeholders are Marubeni Corporation of Japan, the equipment supplier, with 26 per cent and PSEG Global of the US with 20 per cent.

It may be recalled that PSEG and El Paso had filed for arbitration against the Tamil Nadu Electricity Board, which buys power from the plant, for non-payment of bills because of which the electricity board had run up huge arrears in its payment to the company.

The two American companies won in two lower courts against appeals filed by PPN Power Generating Co against the two minority shareholders filing for arbitration, but the company obtained a stay against these proceedings in the Supreme Court, according to reliable sources.

In its 2004 annual report, PSEG has said that it expected the Central Electricity Authority and the TNEB to make a final determination in 2005 of the project's capital cost that might affect the tariff that PPN charges the electricity board.

"An adverse outcome to the continuing negotiations or arbitration with TNEB could potentially result in an impairment of this investment, which could be material to PSEG's and Energy Holdings' respective results of operations," the annual report said.

(PSEG Global, which owns and operates domestic and international generation plants and distribution systems, is a division of PSEG Energy Holdings.)

As of December 31, 2004 PSEG's total investments in PPN were approximately $38 million.

According to the annual report, TNEB has not made full payment to PPN for the purchase of energy and the total receivable as of December 31, 2004 was approximately $110 million (over Rs 450 crore).

PSEG had in mid-2002 said it was exiting the power business in India and consequently sold its 74 per cent stake in the 220-MW Tanir Bavi barge-mounted project in Karnataka to the promoters, the GMR group.

There have been reports in the industry that PSEG is also looking to quit the PPN project, but nothing has been finalised, according to reliable sources.

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