India-based JSW Energy has signed an agreement to acquire 1GW thermal power plant located in the state of Chhattisgarh from Jindal Steel & Power (JSPL) for Rs40bn ($601.2m).


The deal value, however, is expected to increase to Rs65bn ($977m) upon signing the long-term power purchase agreements (PPAs) for the power plant, which is completely secured of fuel.

Proceeds from the transaction, which is expected to be completed by mid-2018, will be used by Jindal Steel & Power to meet interest payment obligations and reduce debt, reported Livemint.

JSW Energy expects the acquisition to diversify its presence in coal-rich eastern India.

JSW Energy said in the statement: "The transaction is structured to be value-accretive to the shareholders of the company immediately upon consummation."

The acquisition is a part of JSW’s plan to have around 12,000MW of installed power generation capacity by early next decade.

Reuters cited JSW as saying: "The adverse operating environment within the power sector in the country is driving distress sales in the sector, and JSW Energy’s robust financial health coupled with a strong balance sheet is providing the company an opportunity to acquire quality power assets at reasonable valuations…"

The deal follows JSW Energy’s acquisition of 1,391MW of hydro power plants from Jaiprakash Power Venture in September 2015.

In September, JSW Energy signed a binding memorandum of understanding (MoU) with Jaiprakash Power to acquire 500MW Bina thermal power plant in Madhya Pradesh, India.

Image: JSW Energy intends to diversify its presence in coal-rich eastern India. Photo: courtesy of dan/