NYSE-listed energy firm Covanta Holding Corporation is looking to divest two power generation plants in India, as part of an asset sale plan in the Asia-Pacific, two separate sources directly familiar with the development said. Covanta will shortly be calling for expressions of interest to offload its liquid fuel power plants with combined capacity of 210MW in Tamil Nadu.
Citigroup will be kicking-off the divestment process on behalf of the $1.55 billion Covanta Holding, which also has presence in the insurance sector in US.
Covanta Energy India Pvt Ltd operates power plants at Samalpatti and Madurai in Tamil Nadu, with 105MW each, which are fully operational use heavy fuel oil/diesel and sell their output to the state electricity board. The plant in Samalpatti, started construction in 1999, is one of the first power plants in India to get all-local-currency, long-term, non-recourse financing.
An email sent to New Jersey-based Covanta Holdings spokespersons on Tuesday did not elicit a response at the time of publication of this article.
Deal making in the domestic power generation space has been revving up with most Indian corporates with interests in this sector - Essar, GMR, Aditya Birla, Jindal and even smaller players such as PVP Ventures - pursuing scaling up as well as consolidation opportunities.
While several overseas players are looking to foray into India's energy sector, Covanta may be exiting as it wants to stay focused on the emerging waste to energy business. The energy-from-waste facilities convert municipal solid waste into renewable energy and is predominantly active in the United States. In Asia, Covanta has two energy-from-waste facilities in China while it is constructing another in that country.
Besides two facilities in India, other fossil fuel assets of Covanta include 118 MW natural gas plant in Bangladesh and two coal-fired facilities in China of 440 MW and 24MW.
Covanta has 65 power generation facilities across Americas, Europe and Asia even though most of them are operating in the US. In 2009, Covanta reported operating revenues of $1.55 billion, down 7% from $1.66 billion in the previous year. Net income stood at $102 million compared to $129 million in 2008.
In another development, Covanta's Asia Pacific president Allard M. Nooy was appointed CEO of Jindal Water Infrastructure and Jindal Urban Infrastructure (part of the $10 billion O.P. Jindal Group).
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.
A report in Mint last month said that NCC Infra Holdings, a fully owned thermal power unit of Nagarjuna Construction, is planning to sell 49% stake to Malaysia’s Genting Group.
The deals among domestic players have also picked up. Essar Power Limited, a subsidiary of London-listed Essar Energy plc, entered into an agreement to buy 100% stake in 2250 MW Navabharat Power Pvt Ltd in Orissa. 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.