Vedanta Ltd., the diversified natural resources group led by Anil Agarwal, has cleared a major hurdle in its restructuring roadmap by resolving a long-standing dispute with SEPCO Electric Power Construction Corporation (SEPCO) related to the Talwandi Sabo Power Project (TSPL) in Punjab.
Settlement with SEPCO Ends Arbitration
The dispute stemmed from engineering, procurement, and construction (EPC) contracts for the 3×660 MW thermal power project at Talwandi Sabo. SEPCO had earlier pursued arbitration claims against Vedanta’s wholly owned subsidiary, Talwandi Sabo Power Ltd. (TSPL).
In a disclosure to the exchanges, Vedanta confirmed that the two sides have now reached a comprehensive settlement agreement, leading to the withdrawal of all arbitration claims and counterclaims. Importantly, this removes the need for a pending National Company Law Tribunal (NCLT) hearing, which had been a potential obstacle for Vedanta’s broader corporate restructuring.
While financial terms of the settlement were not disclosed, the agreement is being seen as a pragmatic step to eliminate legacy disputes and bring greater clarity to Vedanta’s power business.
Link to Vedanta’s Demerger Plan
The settlement comes at a critical time, as Vedanta is in the process of implementing its ambitious demerger plan, announced in September 2023. The proposal seeks to split the group into five separately listed companies focused on:
- Aluminium
- Base Metals
- Iron & Steel
- Oil & Gas
- Power Generation
Initially expected to conclude by March 2025, the process faced delays following legal and regulatory challenges. Vedanta now aims to complete the demerger by September-end, provided pending NCLT approvals are secured.
The Mumbai bench of NCLT had deferred a September 17 hearing after the Ministry of Petroleum and Natural Gas (MoPNG) raised objections. This upcoming hearing will be crucial in determining the path forward for Vedanta’s restructuring.
Strategic Significance
- Risk Mitigation: Resolution of the EPC dispute eliminates a significant overhang on Vedanta’s power business.
- Regulatory Clarity: By settling with SEPCO, Vedanta strengthens its case before NCLT for smooth execution of the demerger.
- Investor Confidence: Removing arbitration risks could improve investor sentiment, particularly at a time when Vedanta is navigating debt challenges and sectoral headwinds.
About SEPCO
SEPCO Electric Power Construction Corporation, headquartered in China, is a global contractor specializing in power generation and transmission infrastructure projects. It has executed several large-scale EPC assignments across Asia, Africa, and the Middle East.
Outlook
Vedanta’s latest move is being read as a confidence-building measure in its restructuring journey. With the EPC dispute behind it, attention now shifts to the upcoming NCLT hearing, which will play a decisive role in whether Vedanta can complete its five-way split by September 2025.
For stakeholders, this resolution underscores Vedanta’s determination to streamline its businesses, unlock value, and potentially attract new pools of capital across its diversified verticals.
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