GMR wants to sell off Singapore power plant but company denies stake sale talks

Cash-strapped infrastructure conglomerate GMR has decided to exit its first independent power project (IPP) outside India by selling the entire 70% stake in its Singapore plant, popularly known as the Island Power Project.

With GMR expecting to raise over $650 million through the sale, the move will generate liquidity and help pare its consolidated group net debt of Rs 37,681 crore as of December 2012, which amounts to a gearing of 3.5 times.

The Bangalore-headquartered group is currently in advanced negotiations with a group of strategic South-East Asian power and utility majors, and is hoping to conclude a deal in the next few months, said multiple sources aware of the development.

GMR officials, however, denied any plans to sell. “We deny any such stake sale in the 800-mw GMR Energy Singapore Pte Ltd,” said a company spokesperson, responding to an email query from ET.

The 800-mw combined cycle gas turbine power plant located at Singapore’s Jurong Island – built at an estimated cost of $1 billion with a 57:43 debt-equity ratio – is in its final stages of completion, and is likely to begin commercial operations by December this year.

Rich Inheritance

The project is housed under GMR Energy (Singapore) Pte Ltd, a subsidiary of GMR Infrastructure In 2011, Petronas International Corporation, an arm of Malaysian state-run oil company Petronas, had bought a 30% stake in the project for $38.5 million (Rs 209 crore) and become a joint sponsor.

GMR inherited the entire Singapore project for a paltry $10 million in 2009 as part of its $1.1-billion global acquisition of US-based Intergen NV in 2008. A year later, when GMR sold its 50% stake in the global utility company to a consortium led by China Huaneng Group, it retained this asset, believed by many, to be the crown jewel in its power portfolio.

 

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