Tata Power managing director Adi Engineer, after the approval from the board of directors said that the transaction would be financed from the company's internal resources. "This is a reinforcement of Tata Power's strategy to deploy funds for strategic growth-enhancement initiatives," he added.

Mr Engineer said the acquisition of Tata Petrodyne represents a firm step to significantly strengthen its position as a leading player in this sector. With this acquisition, Tata Power would have direct access to gas and oil resources that can be used to meet the rapidly-growing demands of its power projects. This would also enable the company to generate increasingly cost-effective power on a national level in future.

Tata Petrodyne is in consortium with Cairn Energy, Hardy Oil & Gas, Oil and Natural Gas Corporation and Hindustan Oil Exploration Company for its gas and oil exploration and development projects in three offshore blocks.

Recently, the South Cambay consortium has been successful in exploring commercial gas reserves and efforts are on by the North Cambay consortium to explore gas in this block. The Cauvery Basin Block continues to yield oil and further prospects of possible incremental oil reserves are under evaluation. Meanwhile, the Tata Power stock, which opened at Rs 97.80 on the BSE went to a high of Rs 98 and closed at Rs 94.85, losing 3.02 per cent as against the previous day's close.