State-owned NHPC, India's largest hydro power producer, will buy back shares worth Rs 1,600 crore instead of going through Offer for Sale, according to sources.
The government had earlier planned to disinvest 11.36 per cent stake in NHPC through OFS in the domestic market, which is in the doldrums.
"The share buy back proposal is aimed at improving the value of company's share in the market," said a source.
Government currently holds 86.36 percent stake in NHPC.
The company will have to seek approval from its Board for the buying back of shares, after which the Power Ministry will approach the Cabinet for the final nod.
NHPC got listed on bourses in 2009 after the government divested 5 per cent stake, while company issued 10 per cent fresh equity.
The government plans to raise Rs 40,000 crore in the current financial year (2013-14) through disinvestment.
NHPC generates 5,702 MW electricity from 17 hydel stations in the country. As many as seven power stations totalling 4,095 MW capacity are under construction.
The company's scrip closed at Rs 16.35, up 1.55 per cent, on the BSE.