Essar Power Limited, a subsidiary of London-listed Essar Energy plc, is acquiring a 100% stake in 2250 MW Navabharat Power Pvt Ltd in Orissa. Essar Power plans to initially acquire a 76% stake, with the balance 24% being acquired upon completion of certain project milestones.

Navabharat is a joint venture between Malaxmi Energy Ventures and Nava Bharat Ventures Ltd. Navabharat has sold about 52% of its existing shareholding in Navabharat Power, the company informed the exchanges today. Malaxmi has sold its entire stake in the firm. The deal size was not disclosed.

VCCircle was the first to report in December that Essar Power has entered into talks to acquire stake in Navabharat Power.

Navabharat Power, which has already got all major clearances and coal-linkages, is a 2,250 MW coal-fuelled power plant being set up in Dhenkanal district of  Orissa, India. The $2 billion project is being implemented in two phases, with the first phase of 1,050 MW

and phase two of 1,200 MW.

The project includes the allocation of the Rampia Coal block of 112 million metric tonnes and a 4.7 million metric tonnes per annum coal linkage with Coal India Ltd.  Phase 1 of the Navabharat already has in place a number of approvals including environment clearances and other approvals like land acquisition are being progressed. The phase 1 is expected to achieve financial closure by end of CY2010.

"Navabharat Power is a major part of our power phase II development projects. This acquisition is in line with the plans announced at the time of our IPO and will keep us on track to develop over 11,000 MW of power capacity by the end of 2014, thereby maintaining our leading position in the private sector power generation market in India," said Naresh Nayyar, CEO of Essar Energy.

Essar Power, part of the telecom to steel conglomerate owned by the Ruias, is planning to expand its installed capacity to  6,000 MW by 2012, as per its website. It has three more coal-based power plants coming up in Gujarat, Madhya Pradesh and Jharkhand.  Essar Power raised Rs 350 crore in funding from IDFC Project Equity last year.

The private equity interest has been visible in number of deals in the power sector since last year. Overseas strategic players and business groups are also now looking to buy assets as they look to enter and expand in the power sector.

In one of the largest deals in recent times, Singapore's Sembcorp Industries acquired a 49% share in Hyderabad-based Thermal Powertech Corporation India, a wholly owned subsidiary of Gayatri Energy Ventures for Rs1,042 crore. Thermal Powertech is setting up a  1,320 MW (Phase-1) thermal plant at Krishnapatnam in Nellore district, Andhra Pradesh.

Another deal was Calcutta Electric Supply Company (CESC), the flagship of the RPG Group, recently completed Rs 300 crore acquisition of Dhariwal Infrastructure, which is developing a 600 mw thermal power plant in Maharashtra. New Delhi-based Aryan Coal Group, a provider of clean coal to power plants, has also acquired a controlling stake in

the 208MW gas fired Spectrum Power Generation.

Nagarjuna Construction (NCC) also plans sell a 49% equity in its 2,640 mw flagship thermal power project, reported DNA Money recently.

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