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Tata bids ₹3,000 crore for UP Transco

Tata Power has emerged the highest bidder for South East UP Power Transmission Company, beating four other bidders with a ₹3,000-crore offer to buy the transmission firm under insolvency process, multiple people aware of the matter told ET. Tata Power had submitted a final bid on October 30 through its subsidiary Resurgent Power Ventures.

Adani Group, Anil Agarwal’s Sterlite Power, Power Grid Corporation of India Ltd and REC Power Development and Consultancy had also submitted final bids.

Resurgent Power Ventures is 26% owned by Tata Power. It’s other shareholders are ICICI Bank, State General Reserve Fund of Oman and Kuwait Investment Authority.

South East UP Power Transmission Company was admitted for Insolvency and Bankruptcy Code (IBC) proceedings by the National Company Law Tribunal (NCLT) on the lenders’ request last year after owner Grupo Isolux Corsan filed for bankruptcy in Spain.

An invitation to submit an expression of interest (EoI) to buy the company was issued by Deloitte on February 18, 2021. The big four auditor is advising the lenders on the sale process.

The Madrid-based Isolux Corsan had won a 35-year concession to build and operate a power transmission network in Uttar Pradesh spanning 1,600 kilometres in July 2011.

It took loans of ₹3,100-crore from local lenders to finance the project. However, due to its financial troubles in its home country and in its US operations it ended up filing for bankruptcy.

Indian lenders then took over the local unit and approached NCLT to start a sale process to recover their loans.

The competition to acquire the transco is reflective of strong investor interest in the power transmission sector which is dominated by public sector players, experts said.

“These are operating assets,” said Manish Aggarwal, partner and head, infrastructure and special situations, at KPMG. “There is virtually no risk when a transmission line is already set up and operating. Moreover, there are very limited opportunities to invest. That’s why you are seeing competition.”

The Centre has earmarked electricity transmission lines amongst assets that it will monetise alongside ports, airports and sports stadiums in its budget announcements.

The private sector has been consistently demanding that more transmission lines be auctioned to them under the tariff-based competitive bidding process. So far, private players have only a 5% share in the power transmission sector. This contrasts sharply with the power generation sector where private players account for almost half of the capacity.

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