Adani buys Lanco's Udupi power plant in Rs6,000-crore deal

Adani Power will acquire loss-making Lanco Infratech's 1,200 MW Udupi thermal plant, in Karnataka, in a deal worth over Rs6,000 crore, the largest ever deal in the country's thermal power segment.

Making the announcement on Wednesday, Lanco Infratech said the deal, which is valued at more than Rs6,000 crore, included Rs4,000 crore debt component.

"This transaction will support the company in reducing its debt and will enable Lanco to receive about Rs2,000 crore as cash and additionally, Adani Power will take Udupi plant's long-time debt of around Rs4,000 crore," Lanco Infratech said in a statement.

The Udupi plant, according to Lanco, is the "first independent power project in the country based on 100 per cent import coal with a captive jetty of four million tonnes per annum and an external coal handling system in the new Mangalore Port Trust."

The capacity can be expanded to handle another four million tonnes, it added.

Lanco supplies 90 per cent of the electricity generated from the plant to Karnataka and the remaining to Punjab.

The company has already signed a pact with Karnataka government for expanding the plant's generation capacity to 1,320 MW.

The debt-laden Adani Power currently has an installed generation capacity of about 8,580 MW and the acquisition of the Lanco plant would bring it closer to 10,000 MW.

The Lanco-Adani deal, which comes less than three weeks after Reliance Power agreed to acquire three hydel projects of Jaypee Group, is part of the consolidation move in the debt laden power sector.

Most investors in power generation assets are handicapped with regulatory hurdles, lack of policy reforms, inadequate supply of fuel such as natural gas, hardening interest rates and a slowing economy making their investments unviable.