The Jaypee Group's decision to sell its 1,000MW Karcham Wangtoo and 300MW Baspa Stage II power projects in Kinnaur district to Abu Dhabi-based firm TAQA has not gone down well with the Himachal Pradesh government.
“The Centre should have consulted the state government before it facilitated the deal,” chief minister Virbhadra Singh told HT on Thursday.
Expressing displeasure over the union commerce ministry's role in the sale, he alleged, “It's wrong to assume that buying hydropower projects is foreign direct investment. In this case, a company has taken over an existing company which was already running power projects, and the deal was made to look like FDI to create infrastructure. This has happened without the state government's permission.”
The CM raised security concerns over the sale of the two projects, adding, “The state should have been taken into consideration, as both projects are located in a strategic area of the country, sharing an international boundary with China.”
He added that the state government could have explored other options. “If the company (Jaypee Group) was unable to run the projects, the state could have given them to any public sector undertaking (PSU). Multinational companies should be dissuaded from buying strategically-located projects,” Virbhadra said.
The government had written to the company seeking an explanation regarding how the deal was struck without prior permission, he added.
“The company had signed its implementation agreement and memorandum of understanding with the state government. There are many pending issues related to the project, and the company has to pay for the crops damaged due to pollution during project construction,” he said.
“Let's see what the company replies. We have many options,” the CM said.
Heavily in the red, Jaypee Group had been looking for buyers for their projects with the combined capacity of 1,300MW for a long time.
Union commerce and industries minister Anand Sharma, who hails from HP, has been facilitating the deal between Jaypee Group and the TAQA-led consortium.
The company's investment was recognised at a meeting of the UAE-India high-level joint task force in Mumbai on March 3, co-chaired by Sharma and Sheikh Hamed bin Zayed Al Nahyan, chairman of the Abu Dhabi crown prince's court.
The projects have been valued at Rs. 10,500 crore, and TAQA, besides taking over the debt, would be paying Rs. 3,820 crore to acquire a 51% controlling stake in both plants.
The remaining Rs. 6,680 crore would be a debt loan transfer to TAQA, and would help Jaypee Group overcome its debt burden.
TAQA, which holds a 51% stake in the consortium, will have control of operations and management of both facilities under the proposed deal. The remaining equity will be held by one of Canada's largest institutional investors (39%) and IDFC Alternatives' India Infrastructure Fund II (10%).
TAQA, meaning 'energy' in Arabic, is the brand name of the Abu Dhabi national energy company PJSC, operating in 11 countries across four continents. TAQA is promoting conventional and alternative power generation, water desalination, oil and gas exploration and production, pipelines and gas storage.