ILFS close to a deal with GAIL for Wind Assets at Rs 4700 crores

By Prasanna Singh/ Updated On Tue, Apr 23rd, 2019

Public Sector Gas Utility GAIL has made the highest offer for the wind assets of scam-hit ILFS

ILFS GAIL Wind In a release from ILFS, the New Delhi based public sector gas major, Gas Authority of India Limited (GAIL) has made the highest binding bid for its wind assets. The deal, if consummated, would include seven wind power plants from the debt-ridden ILFS, at the stated price of Rs 4800 crores, according to ILFS. Interestingly, for the ILFS board, this would be the first big deal they close to shed assets and repay money to its creditors, which has roiled the Indian financial system no end in the past few months.

With a three week deadline, the deal would be a huge relief to ILFS debtors for the renewable division ILFS Energy Development Company Limited, who are owed Rs 3700 crores, as it would indicate they will get back 100% of their principal amount.

For GAIL, the 874 megawatts of operating assets from ILFS would be a huge boost to its own renewables portfolio, an area where it has been diversifying to chase higher returns as well as cut dependence on its primary gas distribution business model.

Managing the assets should not a problem for GAIL with its previous experience, as well as a strong presence in the regions where ILFS wind assets are.

The sale process had started in November 2018 with an invitation for expressions of interest (EoIs). At the end of the process, GAIL was the highest bidder with a binding offer for the seven operating wind power plants which have an average tariff of Rs 5 per kilowatt hour (kWh).

The proposal was unanimously approved by the committee of creditors of IL&FS Wind Energy Ltd (IWEL), the majority owner of the SPVs. The company said it is engaged with ORIX Japan, which owns a 49% stake in the wind portfolio and has the first right of refusal on the sale if the valuation doesn’t match previously agreed expectations.
Other assets in the renewables portfolio of ILFS, including 104 MW under construction and 300 MW solar, will be disposed of separately.