JSW Energy has terminated an acquisition deal of Rs 6,500 crore with Jindal Steel and Power Ltd. The deal was to acquire 1,000 MV power plants of Jindal Steel in Chattisgarh's Raigarh district.
Sajjan Jindal-led JSW Energy, in a BSE filing, said that they plan on terminating the acquisition of the power plants because of the elapsing Long Stop Data and the stipulated conditions.
The proceeding for the thermal power plant acquisition was announced on May 3, 2016. But due to some incomplete conditions precedent, JSW had to extend the Long Stop Date for a year from June 30, 2018, to June 30, 2019.
The proceedings of the deal would have helped JSPL gain revenue to waive off its debt of about Rs 39,000 crore. Looking into the plant load factor of 60 per cent in the Raigarh based company; JSPL also has given a green flag to the decision of termination. According to a report, a plant processing with a plant load factor of 50 per cent can repay its debt comfortably.
However, Jindal Power had submitted the lowest tariff of about Rs 4.41per unit for the supply of power in its initial years, under the pilot scheme of the power ministry, for the bidding.
The scheme of the power ministry was launched to facilitate the operations of the power plants without any power purchase agreements in the initial years which was scrapped later. As per the new rule, the power purchase agreement is mandatory for any deal within the power producing industry.