Tata Group’s energy arm, Tata Power Ltd, announced on Friday the acquisition of ERES-XXXIX Power Transmission Ltd for Rs 18.56 crore.
ERES-XXXIX is a Special Purpose Vehicle (SPV) company involved in power transmission, and Tata Power completed the acquisition for 100 per cent of its equity for consideration in cash on November 14, according to a regulatory filing. The Ministry of Power approved the share transfer to Tata Power.
An SPV is a separate legal entity usually created to secure assets, set up joint ventures, isolate risk, and raise capital. According to the filing, ERES-XXXIX was set up in March this year as an SPV on a build-own-operate basis to set up the transmission system at Gopalpur in Odisha.
The transmission network under ERES-XXXI comprises the 190km of 765 KV line from Angul to Gopalpur, the Gopalpur 765/400KV GIS substation, the 765KV AIS Angul bay extension, and the 400KV OPTCL-Gopalpur substation that is to be developed by OPTCL, as per the Tata Power filing.
Shares of Tata Power have fallen by at least 12.5 per cent in the past month on a cautious market outlook throughout the sector. At Thursday’s close, which also marked the end of trading for the week, Tata Power stock was at Rs 404.65 a piece.
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Earlier this week, the country’s top insurer, the Life Insurance Corporation of India (LIC) announced the sale of its 2.02 per cent stake in Tata Power. The stock sale, amounting to Rs 2,888 crore, cut LIC’s shareholding in Tata Power to 3.88 per cent.
Even as India focuses on renewable energy led by major industry players such as Tata Power, the country is still reliant on fossil fuels. Since oil prices are still around USD 68 per barrel and not shooting up despite mounting tensions in the Middle East and the uncertainties in upcoming US policies under Trump 2.0, India is leveraging such low oil prices.