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AES Oasis to divest stakes in Pakistani power assets

The joint venture between IDB Infrastructure Fund and global power company AES Corporation will exit investments in oil-fired power plants Lal Pir and Pak Gen.

AES Oasis has agreed to sell its stakes in Lal Pir and Pak Gen, two oil-fired power plants in Pakistan, to a consortium led by Nishat Mills, a Pakistani industrial company.

The transaction is subject to regulatory approval and is expected to close in the first half of 2010, according to an AES statement. Other details of the transaction were undisclosed.

IDB Infrastructure Fund could not be reached and AES was not available for comment at press time.

Lal Pir and Pak Gen, which have a capacity of 362 megawatts and 365 megawatts, respectively, provide electricity to the Pakistan Water and Power Development Authority. Both have long-term power purchase agreements with the authority: Lal Pir’s 30-year agreement expires in 2027 while Pak Gen’s expires in 2028.

AES Oasis was formed in December 2003 to develop, own and manage selected AES power generation and water desalination assets in the Middle East and South Asia. At the time, IDB Infrastructure Fund invested $150 million for a 38.9 percent stake in the joint venture, which held three existing AES power assets, AES Lal Pir and AES Pak Gen in Pakistan, and AES Barka, a gas turbine power and water desalination facility in Oman.

Set up in 2001, IDB Infrastructure Fund is a $730 million private equity fund that invests in Islamic Development Bank-member countries such as Pakistan, Iran and Nigeria, among 54 others. It is managed by EMP Bahrain, a subsidiary of private equity firm EMP Global, and has made 12 investments to date.

In May, EMP Global, Dubai-headquartered Abraaj Capital, Manara 3i, a joint venture between an infrastructure fund manager and global private equity firm 3i, were shortlisted to manage IDB Infrastructure Fund II, according to UAE news website Business Emirates 24/7. The fund will target $2 billion and will be seeded by commitments from the Islamic Development Bank, the Saudi Public Pension Agency and the governments of several IDB-member countries, a source in EMP told the news provider.

AES manages $35 billion in assets, which include thermal and renewable energy sources. It provides energy to 29 countries and in 2008, booked revenues of $16 billion, according to its website.