Tata Power exits South African wind power projects

Tata Power has exited its investments in two wind power farms of about 230-MW generation capacity in South Africa for $106 million. The move was in line with the company’s aim to sell sub-optimal international assets, the company said in a statement.

Khopoli Investments Ltd (a 100% subsidiary of Tata Power) announced the execution of a share purchase agreement with Exxaro Resources Ltd for the divestment of the company’s entire 50% stake in Cennergi, a South African joint venture, for an amount of ZAR 1,550 million ($106 million), subject to normal working capital and other adjustments.

Cennergi (Pty) Ltd is a 50:50 joint venture between Exxaro Resources Ltd, a leading South African coal producer, and Khopoli Investments Ltd. The agreement is likely to be completed by the third quarter of FY20. Post this transaction, Exxaro will have 100% ownership of Cennergi.

Cennergi owns two wind farms in South Africa — Amakhala Emoyeni (with a generation capacity of 134.4 MW and 95% shareholding) and Tsitsikamma Community Wind Farm (with a generation capacity of 95.3 MW and 75% shareholding). Each project has a 20-year power purchase agreement with state power utility Eskom.

“The decision to monetise this South African asset is in alignment with our stated strategy to deleverage the balance sheet by divesting sub-optimal size international assets,” said Praveer Sinha, CEO and managing director, Tata Power. “The proceeds from such sale would be re-invested in emerging areas where there is a huge growth opportunity. The company will focus on renewable power, power distribution and service-led businesses in India which will bring in greater value and help us align with the emerging consumer needs”, he added.

ABSA Bank was the sole advisor to Khopoli for the transaction.

“The collaboration between Exxaro and Tata Power over the past seven years to develop these projects to their current status has been commendable and an outstanding success in South Africa’s implementation of its energy strategy. As a South African-based company, Exxaro is pleased with this opportunity to consolidate its interest in this renewable energy asset at a time in South Africa where we need energy security as we respond to increasing negative sentiment towards coal-based electricity generation,” said Mxolisi Mgojo, CEO of Exxaro Resources.