NER-II transmission project : IndiGrid to acquire NER-II from Sterlite Power for $630m

India Grid Trust (IndiGrid) has agreed to acquire the NER-II transmission project from Sterlite Power for about INR 46.25 billion ($630 million) in cash.

The NER-II power transmission project spans the states of Tripura, Assam, and Arunachal Pradesh. The project provides interconnection between Assam and Arunachal Pradesh and gives an additional source of power to Itanagar.

Apart from that, the NER-II transmission project is expected to provide a strong interconnection between the northern and southern parts of the North East.

Pratik Agarwal – Managing Director of Sterlite Power said: “The acquisition of NER-II was envisaged as part of the framework agreement signed with IndiGrid in April 2019. This mega transmission project will help to deliver reliable power for 5.3 Crore people in India’s north eastern region.”

The NER-II transmission project is made up of 11 elements that include a couple of substations with a capacity of 1,260MVA and four transmission lines spanning more than 830km.

IndiGrid to acquire NER-II transmission project from Sterlite Power for $630m. Photo courtesy of norqin from Pixabay.

Through the acquisition, IndiGrid will grow its assets under management by 34% to more than INR 200 billion ($2.8bn).

It will take the asset portfolio of the power infrastructure investment trust (InvIT) to 13 power transmission projects. This will include a total network of 38 power transmission lines and 11 substations spanning more than 7,570km across states and a union territory in India.

Harsh Shah – CEO of IndiGrid said: “We are excited with acquisition of NER-II which is one of the largest acquisitions in Indian power transmission sector in India. NER-II fits well with our strategy of focusing on operating assets with long term cash flows and minimal counter party risk.

“This acquisition would be DPU accretive and augment our recent increase of DPU to INR 12.40 per annum for a considerable period.

“With a robust acquisition pipeline and support from our sponsors, IndiGrid is well positioned to execute its plans for providing stable and growing DPU while maintaining a robust balance sheet.”

The acquisition of the NER-II transmission project by IndiGrid is subject to its unitholders approval, regulatory and other relevant approvals, and also completion of preceding conditions. It is likely to be closed during Q4 FY21.