NTPC eyes centre’s stake in SJVN in a bid to boost non-thermal portfolio

Twesh Mishra New Delhi | Updated on December 07, 2018 Published on December 07, 2018

NTPC presently has 21 subsidiaries. File photo

SJVN is a Mini Ratna Public Sector Undertaking, under the administrative control of the Ministry of Power.

The Centre is using its persuasive skills to lure the Himachal Pradesh government for a smooth transaction between Central Public Sector Enterprise, NTPC and SJVN Ltd.

NTPC’s acquisition of SJVN will propel the government closer to its ₹ 80,000 crore disinvestment target. NTPC’s acquisition of the centre’s stake in SJVN will be in line with the aim of increasing the non-thermal asset base of India’s largest power producer.

According to a company official, NTPC will eventually want to merge with SJVN and further boost its non-thermal portfolio of the company. But for now, the focus will be on just buying out the stake.

Merger is where the State government has concerns. SJVN is a Mini Ratna Public Sector Undertaking, under the administrative control of the Ministry of Power. The company was incorporated on May 24, 1988 as a joint venture of the Government of India and the Government of Himachal Pradesh.

SJVN is a listed company with 63.79 per cent shareholding held by the Indian government, 26.85 per cent with the Himachal Pradesh government and the rest (9.37 per cent) being publicly traded. The current net worth of the company stands at ₹ 10,694.71 crore.

NTPC presently has 21 subsidiaries, SJVN will be its 22nd subsidiary if the transaction is done. However, NTPC is clear that it will like to take management control.

The Centre has so far mopped up over ₹ 32,000 crore in the disinvestment kitty. The proposed acquisition of Rural Electrification Corporation by Power Finance Corporation announced on Thursday is also expected to add another ₹ 15,000 crore to the coffers. Indications from the government are favouring a buyout of the Centre’s stake before the end of the current financial year.

“SJVN mainly has Hydropower assets and we would like to diversify across the power generation value chain,” a top NTPC official told BusinessLine.

At Friday’s share price and market capitalisation, NTPC will have to shell out at least ₹ 6605.46 crore for stake buy out. NTPC expects to finance the acquisition through borrowings from banks, the official said.

“There is an energy transition underway and the percentage share of coal based power generation will have to come down in the overall energy mix. After the acquisition, we will become the owners of SJVN and the company will be a subsidiary of NTPC,” the NTPC official said.

NTPC currently has a total installed capacity of 52,946 MW, while SJVN has an installed capacity of 2003.2 MW.

“NTPC aims to more than double its existing power generation capacity and become a 130 GW company by 2030. Our focus will be on expansion through brown-field acquisition,” the NTPC official said.

SJVN has a total portfolio of 6021.2 MW out of which 2003.2 MW is under operation, 1572 MW is under construction, 1848 MW is under pre-construction and investment approval and 598 MW is under survey and investigation stage. NTPC has projects of over 20,000 MW under construction.

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Published on December 07, 2018
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