Sembcorp Industries said on Monday it has agreed to buy a stake in a coal-fired power plant in India.
The Singapore-listed company has signed a conditional agreement to acquire 45 per cent of NCC Power Projects, which is building a 1,320-megawatt plant along the coast of Nellore in Andhra Pradesh, for about 8.48 billion rupees (S$175 million).
This project "will double Sembcorp's power generation capacity in India and increase its footprint in the country's growing power market", the company said in a press release.
It also "strengthens Sembcorp's position in India's power sector, which is expected to grow substantially over the next decade", Sembcorp added.
The upcoming power plant is located next to Thermal Powertech Corporation India, Sembcorp's first power plant investment in India. Their proximity will allow Sembcorp to benefit from synergies, including using the same management team and the same coal importation and logistics infrastructure for both plants.
Construction of the new plant is currently about 30 per cent completed and the plant is expected to come onstream in early 2016, Sembcorp said.
Financing for the project has also been secured: three-quarters will be funded through project finance loans and the rest through shareholders' equity.
After the deal is completed, Sembcorp will hold 45 per cent of NCC Power Projects and the remaining 55 per cent will be held by NCC Infrastructure Holdings, which in turn is jointly owned by Indian conglomerate NCC Limited and Gayatri Energy Ventures.
Gayatri is Sembcorp's project partner for the Thermal Powertech Corporation plant, which is more than 80 per cent completed. The plant is on track to begin testing and commissioning of its first 660-megawatt unit from the second quarter of this year and scheduled to start commercial operations in the third quarter.
"With our first power project in India progressing well and on track for completion this year, we are now pleased to embark on our second power plant investment there," said Sembcorp's group president and chief executive Tang Kin Fei.
"This acquisition will provide the opportunity for Sembcorp to increase our foothold in India's power market, where we see opportunities for our business to grow significantly in the years to come."