In this regard, the Tata Power-backed Resurgent Power has signed a share purchase agreement (SPA) through its subsidiary Renascent Power Ventures with the lenders group for the stake acquisition in Prayagraj Power Generation.

Subject to customary approvals from regulatory bodies, the transaction is likely to be closed in the coming few months.

Prayagraj Power Generation is a subsidiary of Jaiprakash Power Ventures. Its Bara Thermal Power Project, which is also known as the Prayagraj super thermal power project, is located in Bara tehsil in Allahabad district in the north Indian state Uttar Pradesh.

The coal-fired power plant, which has been estimated to have been built with an investment of INR120bn ($1.66bn), has been in full operations since May 2017 when its third and final unit was installed.

All the three units of the Bara Thermal Power Project are of 660MW capacity each. The first unit of the Prayagraj thermal power project was placed into service in December 2015 while the second unit was commissioned in October 2016.

India’s state-owned BHEL had executed the design, engineering, manufacture, supply, installation and commissioning of the super thermal power project under a Boiler and Turbine-Generator (BTG) package.

Resurgent Power, the power plant’s majority owner in the future, is a joint venture owned by Tata Power’s subsidiary Tata Power International (TPIPL), ICICI Bank and other global investors such as Kuwait Investment Authority and Oman’s State General Reserve Fund. The joint venture was established to acquire assets in the Indian power sector.

While the Tata Power subsidiary owns a stake of 26% in Resurgent Power, ICICI Bank and other global investors hold the remaining 74% stake.

Tata Power said that the deal to take stake in Prayagraj Power Generation is due to the stressed asset resolution process launched by the lenders via a competitive bidding process. In August 2018, the lenders of Prayagraj Power Generation had issued a letter of intent to Resurgent Power regarding the transaction.

Tata Power CEO & MD and Resurgent Power director Praveer Sinha said: “The JV has been evaluating various assets that meets its investment objective and Prayagraj fits into that. Resurgent looks forward to maximizing its potential using the expertise of all the partners.”