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Infrastructure & PPPs in India - Q22021 Update - Power & Renewable Energy

INDIA's renewable energy story saw both local & global investors making strides in development of new projects. Power transmission has seen renewed activity with new projects announced to keep up the pace of evacuation infrastructure for new projects.

Read more about key developments in Infrastructure and PPPs in Q2/2021 in India in power & renewable energy sector our latest insight.

This is first publication on a 2-part insight series on India.

June 2021

BROOKFIELD TO DEVELOP INDIA SOLAR PROJECT WITH ACME SOLAR

Clean energy company ACME Solar and Canadian infrastructure investor Brookfield Renewable Partners have agreed to develop a 450 MW solar power project in India's Rajasthan state. The project, when operational, will sell power to the state of Maharashtra through a 25-year power purchase agreement with Maharashtra State Electricity Distribution Company Ltd, which is also the largest electricity distribution utility in India.

The project is set to provide power to over a million households in the country. Gurugram-headquartered ACME Solar owns a portfolio capacity of 5 GW across 13 states in India. The company's portfolio includes 2.3 GW in operating capacity and 2.7 GW in under-construction power projects.

In June 2021, the company agreed to sell a 50% stake in a 900 MW solar project, also in Rajasthan, to Norwegian clean energy company Scatec. The project, which is estimated to cost USD 400Mn, will be 75%-financed through debt and the remaining will be in the form of equity from ACME and Scatec.


ADANI'S POWER TRANSMISSION UNIT SEEKS TO RAISE USD 337M

Adani Transmission - India's largest private sector transmission and distribution company by assets - is looking to raise INR 25Bn (USD 337Mn) to fund its expansion in the country. The company will seek approval from its shareholders in July during an annual general meeting to raise the amount through various options including issuing equity shares, debentures, and securities. The capital could be raised in one or more tranches and other currencies.

Adani Transmission, owned by Indian conglomerate Adani Group, operates across 12 states in the country with assets spanning 13,027 circuit km. The company is looking to grow its transmission lines to 20,000 circuit km in India by 2022. Adani Transmission acquired an incomplete power transmission project from Essel Infraprojects at an enterprise value of INR 33.7bn. The Warora Kurnool project was initially scheduled to start operations in November 2019 and was awarded to Essel in 2016 in the build, own, operate, maintain (BOOM) model.

In November 2020, Adani completed the acquisition of a 49% stake in Alipurduar Transmission from Kalpataru Power Transmission for an enterprise value of about INR 13bn. The deal included an agreement to acquire the remaining 51% in the project that operates power lines totalling 650 circuit km in West Bengal and Bihar states in eastern India. Adani sold a 25.1% stake in Adani Energy Mumbai Ltd (AEML) in 2020 for INR 32bn to Qatar Investment Authority. Adani Transmission used the equity proceeds of INR 12bn from the proceeds to repay perpetual debt and the INR 20bn was kept as a capital buffer for growth.


INDIAN INFRA DEVELOPER SECURES FINANCING FOR CITY GAS DISTRIBUTION

Infrastructure developer Ashoka Buildcon has tied up financing for city gas distribution projects in the Indian states of Karnataka and Maharashtra. The company secured financing of INR 5.43Bn (USD 73Mn) from domestic commercial banks Punjab National Bank and HDFC Bank at a rate of 8.75%.

Ashoka's city gas platform - called Unison Enviro - backed by Morgan Stanley India Infrastructure, will draw down the debt over the next two years, The platform would invest INR 1.6bn in equity at a later stage. It has already invested INR 1.3bn in equity so far. Ashoka Buildcon received INR 1.5bn from Morgan Stanley India in exchange for a 49% stake in Unison Enviro. The remaining 51% is held by the Indian developer.

Unison Enviro has licenses from the Petroleum and Natural Gas Regulatory Board to develop the city gas distribution business in Ratnagiri, Chitradurga, Davanagere, Latur and Osmanabad districts across two states. The company is developing the gas distribution infrastructure for the supply of piped natural gas to domestic, commercial, and industrial consumers and compressed natural gas for vehicles.


INDIAN DEVELOPER GETS DEBT FOR 250 MW SOLAR PROJECT

Renewable’s developer ACME Solar has secured debt finance for the development of a 250 MW solar power project in India's Rajasthan state. Indian state-owned firm Power Finance Corporation (PFC) will lend about USD 150Mn to the project, while ACME Solar and its partners will provide USD 50Mn as equity finance.

ACME Solar's partners in the project are Denmark-based Investment Fund for Developing Countries (IFU) and development fund UNOPS Sustainable Investments in Infrastructure and Innovation (S3i), each investing 51%, 39% and 10%, respectively, as part of their equity contribution.

The solar project is set to provide clean electricity to about 500,000 households in India. It will be an addition to ACME's existing portfolio capacity of 5 GW across 13 states in India. The company owns about 2.3 GW as operating renewable power projects, while 2.7 GW is in under construction. Earlier In June 2021 ACME agreed to sell a 50% stake in a 900 MW solar project in Rajasthan to Norwegian clean energy company Scatec Solar. The project, estimated to cost USD 400Mn, will finance 75% of its cost through debt from an Indian state-owned lender.

In 2020, The company sold a 100 MW solar power portfolio in Karnataka to Petronas-owned Indian rooftop solar company Amplus for an undisclosed amount, and a 400 MW solar portfolio in the states of Andhra Pradesh and Madhya Pradesh to Actis.


STERLITE ARRANGES DEBT FINANCE FOR TRANSMISSION PROJECT

India's Sterlite Power has reached financial close for an interstate transmission system in the southern part of the country. The company arranged debt funding of INR 5.8Bn (USD 79Mn) for the project - called Udupi-Kasargode - from Indian state-owned power sector lender REC. It did not disclose the total cost of the transmission project.

The Udupi-Kasargode transmission project includes the construction of a 1000MVA 400/220 kV Gas Insulated Substation (GIS), a 400kV (Quad) D/c transmission line of over 240 circuit km from Udupi in Karnataka to Kasargode in Kerala and the installation of two 400kV line bays and bus bar extension at Udupi switchyard.

The project is a part of Sterlite's equal partnership with global investment manager AMP Capital to develop greenfield power transmission projects in India. There are four projects under the partnership, with a circuit length of almost 1,800km across the western, southern, and northeastern parts of India.

In December 2020, Sterlite and AMP Capital teamed up to invest a combined USD 300Mn in Indian transmission projects and also contribute debt financing, taking the total capital outlay to USD 1Bn.

Sterlite owns power transmission infrastructure with projects of over 13,700 circuit km and 26,100 MVA in India and Brazil. The company also sponsored India’s first power sector Infrastructure Investment Trust (InvIT) IndiGrid, which is backed by investors including KKR and Singapore's GIC.


SAUDI FIRM'S 300 MW INDIA PROJECT REACHES FINANCIAL CLOSE

Saudi Arabian company Alfanar Energy has reached financial close for its 300 MW wind power project to be developed in India's Gujarat state. Mumbai-based L&T Infrastructure Finance will lend about INR 14Bn (USD 192Mn) to the project. The wind project, which will be in Bhuj district, was awarded in 2018 to the Saudi Arabian company's renewable energy unit Alfanar Global Development as part of Solar Energy Corporation of India's (SECI) 1.2 GW Tranche V wind power tender. The project will sell power to SECI at a fixed rate of INR 2.77 per kWh.

In 2020, Riyadh-based EPC and development company was in talks with other lenders including the Indian state-owned firm Power Finance Corporation (PFC), Indian Renewable Energy Development Agency (IREDA), State Bank of India and IndusInd bank to finance the wind project.

Alfanar owns a second 300 MW wind power asset, also in Bhuj, which started operations in May 2021. The company also won this project through a SECI wind tender while L&T Infrastructure was the underwriter for its entire debt of INR 14bn. In May 2020, L&T Infrastructure sold some of the debt to PFC in line with its business model of originating and underwriting debt and then selling part of it.

Alfanar has added another 600 MW of greenfield wind power projects to its portfolio in India. The company started operations as a manufacturer of low, medium, and high voltage electrical construction products as well as a provider of EPC solutions for conventional and renewable power plants, allied engineering services and design engineering.


SEVEN COMPANIES EXPRESS INTEREST FOR INDIA POWER TRANSMISSION PROJECT

Seven companies are preparing to bid for a power transmission project in India’s Rajasthan state.