Singaporean utility Sembcorp Industries announced on Monday the sale of its entire stake in its India unit to an Oman consortium for Rs 11,734 crore as part of its decarbonisation drive.
The firm will sell 100 percent of its shares in Sembcorp Energy India Ltd (SEIL) to Tanweer Infrastructure Pte Ltd, it said in a statement.
SEIL is one of the largest independent power producers in India, operating two coal-fired power plants with a combined capacity of 2,640 MW in Andhra Pradesh. In addition, it has a renewable energy portfolio of 1,730 MW, with another 700 MW under construction.
Tanweer will pay the acquisition price in deferred payments and Sembcorp will remain on board as a technical adviser after the sale is complete, the firm said.
Existing employees will not be affected by the transfer.
In a media call, Vipul Tuli, CEO of Sembcorp Industries in South Asia, said the company has no plans to exit India and this divestment will allow it to invest more in the country’s renewable space.
Sembcorp, he said, had announced in 2020 that it would no longer invest in coal-fired power projects. “We’re getting very attached to that.” Following the divestiture of SEIL, Sembcorp will continue to pursue opportunities in wind power generation, RTC power, storage and green hydrogen.
The deal is part of Sembcorp’s strategy to decarbonize its operations and switch to green power generation.
Tanweer Infrastructure is indirectly owned by a consortium led by Oman Investment Corporation SAOC (OIC) in partnership with the Ministry of Defense Pension Fund, Oman, one of the largest pension funds in Oman with significant investments in energy and infrastructure, and Give Investment SPC.
OIC is a leading private equity investment firm in Oman with a strong track record of investing in energy and infrastructure projects, real estate, logistics, healthcare, and asset and project management services.
It has been a partner with Sembcorp in the $1 billion Salalah power and water plant in Oman since 2009.
Tuli said that to ensure the continuation of the highest standards of reliability, operational efficiency and best practices in the management of SEIL’s supercritical plants, Sembcorp will continue to provide technical advisory services to SEIL through a technical services agreement.
SEIL’s existing operations team will continue to work under the new ownership of Tanweer Infrastructure.
In addition, Sembcorp will provide ongoing support to SEIL’s initiatives to reduce the intensity of its greenhouse gas (GHG) emissions. This is done through a financial incentive, where the interest rate under the DPN (deferred payment note) will be reduced correspondingly with improvements in SEIL’s GHG emissions intensity.
Wong Kim Yin, Group Chairman and CEO of Sembcorp, said, “The sale of SEIL accelerates the transformation of Sembcorp’s portfolio from brown to green while protecting the interests of all stakeholders.” The sale of SEIL will result in a reduction in Sembcorp’s GHG emissions intensity of 0.51 tons of carbon dioxide equivalent per megawatt hour to 0.32, according to the statement. “Sembcorp would have achieved its 2025 target of reducing its GHG emissions intensity to 0.40 tCO2e/MWh ahead of time.” After the sale is complete, 51 percent of Sembcorp’s power capacity will be renewable energy, up from 43 percent. Sembcorp will have a 14 GW power portfolio, with 7.1 GW of renewable energy capacity comprising solar, wind and global energy storage.
On a pro forma basis, Sembcorp’s share of net earnings from its sustainable solutions portfolio for the first half of 2022 will increase from 25% to 31%.
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