Korean Western Power Co. Ltd (KOWEPO), a subsidiary of South Korea’s $38.7 billion power giant KEPCO, has acquired 22.7 per cent stake in Pioneer Gas Power Ltd for an undisclosed amount. Pioneer Gas is setting up a 388 MW gas-based power plant in Raigad, Maharashtra.

KOWEPO has plans to take its stake up to 40 per cent in the project which is expected to cost $250 million and will be operational by the end of 2013. Earlier, a media report had indicated that Rs 500 crore ($100 million) would be the deal value for picking up 40 per cent stake in the project.

“We have been keen to enter India given that the country is facing a huge energy deficit and the energy requirement is expected to grow at 8-10 per cent annually over the next five years. We are impressed with the progress of PGPL’s upcoming 388 MW power project,” said Bong Geun Kim, director of KOWEPO.

Financial closure has been done with a consortium of nine banks, with IFCI being the lead institution, and the EPC contract has been awarded to Tata Projects Ltd, according to Kim. “PGPL’s capex cost being one of the lowest during current times for a gas-fired power plant is a new benchmark in itself,” he added.

Lodha Capital Markets acted as the sole advisor to Pioneer Gas Power Ltd for this transaction.

KEPCO is the largest electric utility in South Korea with revenues of $38.7 billion and is responsible for almost 90 per cent of South Korea’s electricity generation. Its subsidiary KOWEPO is engaged in power generation and operates thermal power stations & combined cycle power plants. KEPCO operates about 80,000 MW of power plants in Korea.

Pioneer Gas Power Ltd is part of the privately held Hyderabad-based Pioneer Group, promoted by K Sudhir Rao and K Suhan Rao. In September 2010, the promoters sold their public-listed liquor firm to the UB Group.

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