NTPC receives 13 EoIs for divesting up to 10% stake in RE arm; decision by month-end

State-run NTPC has received 13 expression of Interests (EoIs), including from ArcelorMittal, Brookfield and Canada Pension Plan Investment Board (CPPIB) for acquiring up to 10 per cent stake in its renewable energy (RE) arm, NTPC Green Energy (NGEL).

The decision on the winners is under consideration and is expected to be finalised by the month-end.

The country’s largest power generator is consolidating all its RE assets and NTPC Renewable Energy (NREL) under NGEL and the process is expected to be completed by the December-end, sources said.

Monetisation plan

NTPC plans to raise around ₹15,000 crore through asset monetisation in the next three years, and the listing of NGEL is part of the plans.

“NGEL’s monetisation process gained momentum in May-June, and has generated good interest. Around 13 EoIs have been received including from CPPIB, Brookfield, TAQA, Petronas, and ArecelorMittal. They are starting with 5-10 per cent, but can go up to 26 per cent. NTPC expects NGEL to be valued at around ₹2,000 crore,” one of the sources said.

However, the plans for coming out with an initial public offer for NGEL will now take place in FY24 as the CPSU wants to first focus on-boarding investors to enhance the RE arm’s market potential, the source added.

NTPC’s RE portfolio of 11.5 gigawatts (GW) comprises 2 GW of installed, 4.1 GW under construction, 2.2 GW bids won (near construction) and 3.22 GW of capacity under tendering, brokerage ICICI Securities said in a report last month.

Genco won 3,265 MW of RE TBCB contracts in FY22 and 650 MW in Q1 FY23. It has commissioned 502 MW of solar projects in FY22 and 172 MW in Q1FY23. The company has also received approval for its 4.75 GW RE park at Khavda, Gujarat and is setting up the same. It plans to develop another 19 GW of RE capacity through UMREPPs, it added.

Enhancing RE target

NTPC has set a target of 60 GW of RE power by 2032, with non-fossil fuels accounting for 50 per cent of its capacity. Sources said that the company is not looking to expand this target.

“NTPC is looking at adding up to 132 GW of RE capacity by 2032. To add another 60 GW capacity, the company will require a funding of around $30 billion. It is now working on the finer details,” one of the sources said.

When asked about raising funds, the source added that the company already incurs a capex of around ₹24,000-25,000 crore annually. Its standalone capex target for FY23 is around ₹22,000-23,000 crore.

RE push

NTPC forayed into the RE sector in 2004 through distributed generation projects for remote villages for which grid supply was either technically not feasible or commercially not viable. Under the National Solar Mission in 2010, it implemented eight solar projects of 105 MW by FY16 and one wind project of 50 MW.

To take up bigger solar projects under competitive bidding regime and implement in a short period of time, it was envisaged that a separate company can be formed exclusively for RE business. On May 9, 2020, NTPC Board approved formation of a new subsidiary and on October 7, 2020, NREL was registered with the registrar of companies (RoC).

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