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N. Ramakrishnan

Pact signed to sell subsidiary; deal may end by mid-2007

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Chennai Feb. 6 CMS Energy and ABB Ltd have sold their stake in ST-CMS Electric Company Pvt Ltd to the Abu Dhabi National Energy Company (Taqa). The two companies had a 50 per cent stake each and the sale is part of their overall restructuring plan, according to information available on the Internet.

ST-CMS Electric Company runs a 250 MW lignite-fired power plant at Neyveli, about 200 km south west of Chennai.

According to reliable sources, the deal is likely to be completed by mid-2007. The sale consideration for this plant is not known.

CMS Energy has signed an agreement to sell its subsidiary, CMS Generation Company, to the Abu Dhabi National Energy Company for $900 million.

Included in the deal are two major power and desalination projects in the United Arab Emirates, power plants in Morocco, Saudi Arabia and Ghana, besides the Neyveli plant.

According to a press release on ABB's Web site, the company will sell its stake in two power projects — in Morocco and in the Neyveli plant — to Taqa for $490 million.

The assets in Morocco and India are part of ABB's Equity Ventures unit, "which is among the company's non-core activities," the release said.

The sale was part of ABB's strategy to focus on power and automation businesses.

The ST-CMS project was among the first eight "fast track" power projects announced by the then Government at the Centre in the early 1990s. This meant that the project would have a Union Government counter guarantee, apart from other payment security mechanisms.

The project was commissioned in December 2002 and has since then been selling power to the Tamil Nadu Electricity Board.

The capital cost of the project is about Rs 1,170 crore, of which the equity component works out to about Rs 350 crore.

The company earlier had a foreign exchange debt, which has since been swapped with Rupee debt from a consortium of Indian banks. After the refinancing, the Centre's counter guarantee was also not required.

With this sale, CMS has completely exited the power generation business in India. It had stakes in two other private power projects — a 49 per cent stake in the liquid fuel 200 MW GMR Vasavi project in Chennai and about 25 per cent in the 216 MW GVK Jegurupadu combined cycle project in Andhra Pradesh — which were sold some time back.

CMS Energy was also part of a consortium that bagged a liquefied natural gas project in Tamil Nadu through an international open bid. But that project did not take off.

More Stories on : Power | Restructuring | ABB Ltd

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