The UK company Powergen, which announced its intention of pulling out of India twelve months ago, is now to buy the Gujarat government’s stake in the 655 MW Paguthan power projectfor around Rs 2880 million (£ 40 million). It is reported that the UK company might later sell this 12 per cent holding to CLP International.
Powergen owned 88 per cent of the power project one year ago but sold it to a joint venture, CLP Powergen India in which CLP International holds 80 per cent and Powergen 20 per cent. According to CLP International sources the deal was initiated between the Gujarat government and Powergen before the latter’s decision to withdraw from the country. Powergen is believed to have made an advance payment of 10 per cent of the sum for the government holding.
The Paguthan project was initially promoted by the Torrent Group and was one of the first independent power projects to start producing power in India. The Torrent Group later sold its interest to Powergen, its joint venture partner in the scheme.
Powergen initially owned 27.8 per cent of the power plant. This increased to 74 per cent with the purchase from the Torrent Group and then to 88 per cent when it acquired a stake held by Siemens, the engineering, procurement and construction contractor, for approximately £32 million.
Recent naphtha price rises have made the duel fuel fired power plant less economical. Reduced takeoff by the Gujarat Electricity Board has left the plant running at a load factor of less than 50 per cent.