Teesta Urja ends feud with Sikkim, gives 26% stake to state

by Rachita Prasad,ET Bureau


.MUMBAI: Teesta Urja, which is developing the 1,200-mw Teesta III in Sikkim, has resolved the long-standing dispute with the state government by allocating 26% stake to it, paving the way for speedy execution of the project, sources involved with the development said.
In a board meeting on Friday, private developer Teesta Urja approved the transfer of around 30 crore shares, representing 26% stake, for a total consideration of Rs 296 crore, sources said. This comes at a time when the Sikkim government has reportedly cancelled four hydropower projects, including the 280-mw Teesta I, due to local opposition and environmental issues.

Teesta III too has been marred by delays after it was hit by an earthquake in 2011 and also due to a prolonged dispute between Teesta Urja and the Sikkim government over allocation of shares.

"The shareholding issue has been resolved. This would help us in raising additional funds needed for the cost overruns and expedite the project so that we can commission it in September 2013, or latest by December," a top official from Teesta Urja told ET.

The cost of the project was originally pegged at Rs 5,700 crore, but it has gone up due to delays. However, company officials declined to comment on the quantum of additional cost.

The government of Sikkim moved court against Teesta Urja alleging that the latter had not allocated the government 26% stake in the company, which was a pre-condition in the memorandum of understanding signed between the two.

"Athena Projects, which holds 38% in Teesta Urja, was the custodian of the government's stake. The transfer of stake was delayed partly because the government was dragging its feet in taking the stake, and partly because Athena delayed the transfer," a source, close to the development, said.

Singapore based-Asian Genco owns 50.1% in Teesta Urja. Asian Genco is jointly controlled by promoter Vijaykumar TV and a consortium of investors that includes Morgan Stanley, General Atlantic, Goldman Sachs, Everstone Capital, PTC India Financial Services and Norwest Venture Partners. Sources said that 75% of the construction work at Teesta III is completed.