NEW DELHI: The tie-up between French energy giant Engie and Dubai-based private equity firm Abraaj Group to build 1,000 MW of wind energy projects in India, announced last September, has fallen through. But Abraaj is helping Engie in its efforts to find a new partner.
“They (Abraaj) are extremely committed,” Engie CEO Isabelle Kocher told ET, while confirming the parting of ways. “We are not very far from finding a solution.” She didn’t elaborate.
Kocher was in New Delhi to attend the inaugural summit of the International Solar Alliance (ISA). She later accompanied Prime Minister Narendra Modi and French President Emmanuel Macron to Mirzapur in Uttar Pradesh where they inaugurated a 101 MW solar project built by Engie.
Engie is the world’s largest independent power producer with 102,700 MW of projects globally, including 24,000 MW of renewable energy projects and revenue of about $83 billion. In India, it has 810 MW of solar projects either commissioned or under construction
Few details about the Engie-Abraaj partnership were given at the time of its announcement. The end of the alliance follows internal problems at Abraaj, the world’s largest private equity firm dedicated to developing economies. Abraaj manages funds worth $13.6 billion from 24 marquee investors, including the World Bank and the Bill and Melinda Gates Foundation.
In early February, some investors accused Abraaj of misusing part of the funds entrusted to it. In particular, they questioned why $200 million – part of a $1 billion healthcare fund started in late-2016 to build hospitals in less-developed countries – had not been used. While Abraaj denied any wrongdoing, citing a review by KPMG, founder Arif Naqvi gave up control of the fund management business late last month.
Industry sources maintained that following the controversy, Abraaj was finding it difficult to raise fresh funds and had thus been forced to call off its India-specific alliance with Engie. But it had already located another joint investor, with which initial talks have begun.
Since September, when the partnership was announced, Engie has won two wind projects – 30 MW at the auction held by Gujarat Urja Vikas Nigam Ltd (GUVNL) in December and 50 MW at the one held by Solar Corporation of India (SECI) in February – on its own steam. These mark Engie’s first forays into wind energy in India. Kocher confirmed that, despite the Abraaj setback, work on both would continue. “It doesn’t change anything,” she said.
“We’re committed to both those projects,” said Malcolm Wrigley, Country Manager, Engie India. “We may slow down on bidding for new projects until we find another partner. But we are pretty confident that a partner will come through by the time we get into more commitments.”
Though upbeat about investing in India’s renewable energy drive, Kocher expressed concern at the steep decline in solar and wind tariffs in recent auctions.
“It is important to maintain some rationality with prices,” she said. “In many countries where we are active, there is a rule that a developer cannot bid if he has not secured the financing in advance. That is not yet the case in India. It should be looked into so that developers don’t quote crazy prices at auctions and then find that there is no financing at that level.”
Engie is involved in the electric vehicles space in several countries but has refrained from entering it as yet in India. “For success in electric vehicles, India needs to create the same kind of conditions that it has done for renewable energy,” said Kocher. “There needs to be a regulatory framework and some agency – like SECI in renewables– to coordinate things at the federal level.”
SECI is the Solar Energy Corp. of India, an arm of the Ministry of New and Renewable Energy.