Speaking to The Financial Express a day after his announcement that NTPCwould take over NHPC for Rs 4,500 crore, the minister said NHPC was nowunable to take up big projects on its own due to lack of appropriatefinancial resources and was looking at the joint venture route to take upbig hydro projects.

NTPC, on the other hand, even after staging an entry into the hydel sectorand despite having requisite funds, is unable to take up hydro projects dueto lack of technical expertise. With the acquisition of NHPC by NTPC, thetechnology developed by one company will automatically become available tothe other, Kumaramangalam said.

Moreover, the consolidation of the two companies will definitely help in abetter realisation of financial resources for executing hydro projects byNTPC," Kumaramangalam added.

On NHPC chairman Y Prasad's comments that he was not taken into confidenceabout the government's decision to sell NHPC to NTPC, Kumaramangalamcategorically said that the entire exercise for NHPC's takeover had beenworked out by the ministry in consultation with both NTPC as well as NHPCand was not a sudden decision.

Even the Disinvestment Commission has recommended that NTPC should enhanceits share value before disinvestment. Today, the asset value of NHPC is overRs 10,000 crore and that of NTPC is estimated at over Rs 50,000 crore. Aftermerging the two companies, not only will the asset value go up, but it willalso help NTPC in raising massive financial resources from the market forfunding its future projects, Kumaramangalam said. The exact buyout, he said,will take sometime, meanwhile, it has been meanwhile proposed that NTPCwould buy the shares of NHPC at face value and a part of the transactionamounting to Rs 2,500 crore would be completed before March 2000 and theremaining transaction of Rs 2,000 crore will be completed thereafter.

The move has faced strong opposition from NHPC with its chairman Y Prasadstrongly objecting to the move. Prasad said that NTPC did not have anyexperience of taking up hydro projects and the plans of making NHPC itssubsidiary would have a strong negative implication on the hydro power plansof the country. He says NHPC, which has been caught unaware by thisannouncement, will take up the issue with the power ministry shortly andwill make all efforts to prevent this takeover.