After initial differences tough negotiations on between Adani Group and DGPC
The proposed joint venture between the Adani Group and Druk Green Power Corporation (DGPC) over the 570 MW Wangchu project got off to a rough start at first.
Initially the Adani Group indicated that it wanted a 70% majority stake in the project and not just a 30-year concession period, but a concession period going to 90 years plus.
The Bhutanese side turned this down as the policy does not allow majority stake to private companies and the Adani Group side went quite with no written proposal coming in as time lapsed.
After a while this was interpreted as the Adani Group having pulled out or a deal becoming dead on arrival. A senior source even told this paper that Adani had withdrawn.
However, with the Adani Group saying there are still on board, the above on hindsight appears to have been a business negotiation tactic to see how much concession Bhutan can give on ownership and the concession period.
How, the deal will eventually work out is still up in the air as the Adani Group is yet to give a written proposal until an understanding is reached on ownership, financing and other key issues.
After the bumpy start and both sides taking their own stance there is now efforts being made by both sides to save the deal and have something palatable to both sides.
This week a team came from the Adani Group and though nothing concrete could be achieved the DGPC made its stand clear that it will not budge from the majority stake stand, which is non-negotiable.
From the Adani Group side the enquiry was would DGPC be the lead to get the financing if it is the majority stakeholder to which the DGPC said no. The Adani Group has been asking for the majority stake since it says it would be easier to raise finance.
The Adani Group and DGPC discussed a possible option where the project would be converted into a Special Purpose Vehicle where DGPC could have its majority share but it would have to be registered in India to raise money.
However, a headache here is that since power is treated as a strategic sector in India such SPVs is currently not allowed under current rules in India though SPVs are allowed in other areas.
If that does not work then the SPV could even be located in a third country destination like Singapore etc.
The negotiations have not even reached the concession period part, which is 30 years with five years extension offered by DGPC.
From all signs it looks like there will be tough negotiations ahead and it will take some time before anything can happen.
