NEW DELHI : Oil and Natural Gas Corp. Ltd (ONGC) is in the fray for Finnish state-run power utility Fortum Oyj’s Indian solar projects totalling 185 megawatts (MW), two people familiar with the matter said, adding that the deal may have an equity value of around $130 million.
Others in the race include Malaysia’s state-run oil and gas company, Petronas unit Gentari Sdn Bhd, Singapore’s Sembcorp Industries Ltd, Edelweiss Infrastructure Yield Plus Fund’s Sekura Energy Ltd, and private equity firm Actis Llp.
The five bidders were shortlisted from 11 non-binding offers that were submitted, the people said on condition of anonymity.
Kotak Investment Banking is managing the transaction, which is estimated at an enterprise value of around $200 million. The deal has seen significant interest since buyers of power from these projects having AA+ rating include state-run entities such as Solar Energy Corp. of India Ltd, NTPC Ltd and NTPC Vidyut Vyapar Nigam Ltd.
Global oil companies such as energy giant Shell Plc, TotalEnergies, Thailand’s PTT Group, and now Petronas have already established a presence in India’s green energy sector at a time of disruption in the conventional hydrocarbon space. ONGC, on its part, plans to spend ₹1 trillion on green initiatives by 2030 to help achieve net-zero emissions by 2038. ONGC has a renewable energy portfolio of 189MW and plans to ramp it up to 10 gigawatts (GW) by 2030.
“The sale process has entered the second phase with shortlisted bidders doing due diligence,” said one of the two people cited above.
Sanjay Aggarwal, the president of Fortum India Pvt. Ltd, declined to comment. Spokespeople for Kotak Investment Banking, ONGC, Petronas, Gentari, Sembcorp, and Edelweiss did not respond to queries emailed on Sunday afternoon.
An Actis spokesperson declined to comment.
The stake sale is part of Fortum’s strategy to take risks early on and eventually monetize projects to raise capital for new ventures.
Fortum, the third-largest Nordic utility, has 1GW capacity under development in India. It is also building a bio-ethanol plant at Numaligarh Refinery in Assam, waste to energy and charging stations for electric vehicles.
India’s green energy space has been abuzz. Last month, ReNew Energy Global Plc announced an equal joint venture with Gentari to develop 5GW capacity, wherein Gentari Renewables India Pte. Ltd will have a 50% equity stake in Nasdaq-listed ReNew’s utility-scale 5GW renewable energy portfolio comprising solar, wind and energy storage projects.
“ONGC is in advanced stage of crafting collaborations with leading players in the energy space on various low-carbon energy opportunities, including renewables, green hydrogen, green ammonia and other derivatives of green hydrogen,” ONGC said in a statement on Tuesday.
“ONGC is planning to set up two green-field O2C plants in India. ONGC is charting a roadmap for opportunities in renewable energy and low-carbon sectors,” the ONGC statement said, and added, “With each step forward, its discourse and actions will align more with that of an ‘energy’ company rather than solely an oil and gas explorer and producer.”
Currently, India has an installed renewable energy capacity of 172GW, and another 128GW are either under implementation or have been bid out. Key issues in India’s renewable energy sector include the low availability of solar modules and the high cost of setting up battery energy storage systems, which is critical for maintaining grid stability.
Actis, which invests only in emerging markets, has so far committed $2.1 billion for the Indian market and now has its third clean energy firm Blupine Energy in the sector after selling Sprng Energy and Ostro Energy to Shell Plc and ReNew Power Ventures, respectively. Singapore’s Sembcorp Industries Ltd is also active in the space and is in talks to buy clean energy projects totalling 1.1 GW from ReNew Energy Global Plc at an enterprise value of around $1.2 billion for which Ahmedabad-based Torrent Power also submitted a non-binding offer, Mint reported earlier.
Earlier, Sembcorp Green Infra Ltd (SGIL) bought US private equity firm Global Infrastructure Partners’ India Infrastructure Fund II’s stake in Vector Green Energy Pvt. Ltd at an equity value of S$474 million ($345 million). Singapore Exchange-listed Sembcorp through SGIL has a 1.051GW wind energy capacity in India. Sembcorp is upping its bets on India’s green energy space after the Singaporean company sold Sembcorp Energy India Ltd, which operates two supercritical coal-fuelled power projects totalling 2.6GW, to Tanweer Infrastructure Pte Ltd for ₹11,700 crore.