The Centre is using its persuasive skills to make the Himachal Pradesh government agree to a deal 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 objective of increasing the non-thermal asset base of the country’s largest power producer.

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

But the State government has problems with the merger. 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 between 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. The State government has a 26.85 per cent stake and the rest (9.37 per cent) is held by the public. The current networth of the company is ₹10,694.71 crore.

The disinvestment moolah

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

The Centre has so far mopped up over ₹32,000 crore through disinvestment. 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 favour 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 ₹6,605.46 crore for a stake buyout. NTPC expects to finance the acquisition through borrowings from banks, the official said.

Energy mix

“There is an energy transition under way 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 2,003.2 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.

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