Greenko set to buy into $1.5 bn Teesta Project in Sikkim

MUMBAI: Greenko is making its boldest bet yet in hydel power, buying a chunk of Teesta Stage III in Sikkim, the largest private hydroelectric project in Asia, in a multi-phased transaction, people in the know said.

The transaction will further bulk up the operating renewable portfolio of Greenko, backed by Singapore’s GIC and Abu Dhabi Investment Authority, to 6.2 gigawatts and give a much-needed exit to the project’s original financiers — a group of marquee PE investors who have been stuck for almost a decade after putting in $425 million to bankroll this high-profile venture in 2010.

To start with, Greenko will buy a 40% stake in Teesta Urja Ltd (TUL) for $200-250 million (Rs 1,400-1,750 crore) from Singapore-based Asian Genco Pte Ltd, a company majority owned by PE investors such as General Atlantic, Goldman Sachs, Morgan Stanley, Norwest Partners and Everstone Capital. Greenko has already applied for approvals from the Competition Commission of India, added the officials.


The Government of Sikkim owns the remaining 60% in TUL, after having to take it over to ensure completion of the project that got embroiled in a series of issues ranging from clashes between founder-promoter Vijaykumar TV and his investors that led to prolonged arbitrations, to regulatory and infrastructure logjams, environmental activism and even an earthquake.

“The state government had taken a Rs 3,000 crore leverage for project completion and its stated position has been to dilute (the stake) over a period of time. Greenko is a long-term asset developer and as a policy does not take minority interests in projects or companies. A phased takeover will therefore be inevitable,” said an official in the know.

A Greenko spokesperson declined to comment.

Dhanpal Jhaveri, the managing partner of Everstone and a member on the TUL board representing PE investors, did not respond to an email seeking comment till press time Tuesday.

TUL,a special purpose vehicle, got created to develop the project as a build-own-operate-transfer contract for 35 years, after which the project was to be returned to the state government. The project includes a 60-meter-high concrete-faced rockfill dam with two tunnel spillways, a reservoir flushing tunnel, two desilting chambers, a headrace tunnel and surge shaft, along with two pressure shafts. The underground powerhouse contains six 200-megawatt turbine-generator units.

Originally scheduled to get commissioned in September 2012, it finally went live 18 months back after seeing massive cost and time overruns. The initial project cost was fixed at Rs 5,705 crore as per the techno economic clearance at 2005 prices. Currently it has debt alone of Rs 10,000 crore.

The lenders are unlikely to take any haircut.

“The transaction was to take place in 2019 itself but after blessing the project, the then chief minister Pawan Kumar Chamling, the longest serving Indian chief minister, had to demit office. Negotiations had to start afresh with the new state government,” said an official in the know, speaking on the condition of anonymity as the talks are in private domain.

After being in power for 25 years, Chamling’s Sikkim Democratic Front lost to the Sikkim Krantikari Morcha in a closely contested assembly election last year.

Set up in 2006 by first-generation entrepreneurs Anil Kumar Chalamalasetty and Mahesh Kolli,Greenko has a footprint in 13 states and an expected Ebitda (earnings before interest, tax, depreciation and amortisation) of over $500 million. After this deal, Greenko’s hydro portfolio alone will be around 2 GW. The founders own a quarter of Greenko, while GIC is the largest shareholder with a 60% stake, having invested $1.4 billion so far. ADIA owns the remaining 15%.