Adani Group, RIL withdraw from bidding for SKS Power Generation

27 Mar 2023 , 09:55 AM

According to news reports, Adani Group and Reliance Industries have not submitted updated bids for SKS Power Generation (Chhattisgarh), making it a five-way competition for the 600 MW thermal power project.

Sarda Energy & Mines of Nagpur, Jindal Power of Delhi, NTPC, Torrent Power of Gujarat, and Vantage Point Asset Management of Singapore have all submitted updated bids to acquire SKS through the corporate insolvency resolution procedure.

According to the reports stated above, Sarda, Jindal Power, and Vantage Point are at the top of the list among them with few alternatives.

One of them stated, ‘The offers have been received in the broad range of Rs1,700 crore to more than Rs2,000 crore.’ ‘With less than Rs10 crore in total revenue between them, Sarda, Jindal, and Vantage are at the top of the band. To accurately examine their plans and determine the preferable bidder, banks will need to consult with each of them.’

Initiation of the SKS resolution procedure took place in April 2022. The company owes the Bank of Baroda and the State Bank of India (SBI) Rs1,890 crore.

Because of the great demand for the plant, bankers are optimistic that they will be able to recoup all of their debts.

NTPC, a state-owned company, was regarded as a strong candidate but, according to insiders, its revised bid is at the lower end of the range. NTPC is now managing the plant in Raigarh district as a result of a government decision intended to address electricity shortages.

According to the news reports, the overall acquisition cost, assuming lenders receive their full money, is less than Rs4 crore per MW. This contrasts with the Rs9 crore per Megawatt needed to construct a comparable facility today.

With a railway line that transports coal straight to the plant—a unique facility—South Eastern Coalfields, a Coal India subsidiary, has a 25-year fuel deal with the SKS plant.

Additionally, given that a hard summer is predicted, analysts predict that demand for electricity will increase over the next few months, providing a favorable commercial opportunity for privately operated facilities to sell electricity on the open market.

It is unknown why Adani and Reliance did not raise their offers, but those with knowledge indicated that both companies had reassessed their plans in light of the aggressive first-round offers. No one could be reached right away at either company.

Creditors won’t want to incur the risk of delaying payment, therefore they will favor bidders with a bigger cash component.

The 600 MW plant’s operation has been suspended after its Hong Kong-listed owner Agritrade Resources was unable to maintain it owing to personal financial issues. 2019 saw the purchase of the plant by Agritrade Resources following a one-time agreement with a group of lenders headed by SBI.

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