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India: Essel Group in Talks to Sell Warora-Kurnool Transmission Line

The Essel Group is in talks with Adani Transmission and Tata Power to sell its under-construction Warora-Kurnool transmission line in an attempt to lower debt.

 

The talks are at an initial stage and a deal depends on various factors including valuations, state of the project and how much haircut lenders are willing to take. The Warora-Kurnool transmission line was inter-regional transmission project awarded under inter-state tariff-based competitive bidding in July 2016.

 

The 765 kV project, which included laying of transmission lines in central India from Warora in Maharashtra and Kurnool in Andhra Pradesh, was supposed to facilitate distribution of power to the southern region.

 

However, it has been hit by delays as the timeline for the scheduled commissioning of the project is past its November 2019 deadline.

 

In June 2019, Essel Infraprojects had sold two transmission assets namely, Darbhanga-Motihari Transmission and NRSS XXXI (B) Transmission, to Edelweiss Infrastructure Yield Plus Fund.

 

The agreement had given Edelweiss the right to purchase two other transmission assets owned by Essel Infraprojects, the Warora-Kurnool Transmission and NRSS XXXVI Transmission. However, Edelweiss is no longer interested in these projects because of the delays in execution.

 

YES Bank and PTC India Financial Services are the lenders to the project. A total of Rs 4,000 crore has been sanctioned for the Warora-Kurnool project. The lenders are also keen that the project should be taken over by a more capable company which can invest to complete the project.

 

The transmission line covers the districts of Warora, Warangal, Hyderabad, Kurnool and Chilakaluripeta with a sub-station at Warangal. The initial contract period for the project was 35 years post commissioning of the project.

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