The joint venture equity structure proposed by L&T for this alliance, with L&T holding 74% and NHPC 26%, has been turned down by the PSU. The initiative was part of the governments plan to kickstart its ambitious capacity addition programme wherein over 78,500 mw in fresh capacity is proposed to be added in the 11th Plan.
In a letter to the power ministry on June 20, L&T CMD AM Naik said, We have always maintained that a 74% equity holding by L&T in the JV would strengthen the alliance and facilitate expeditious development of hydro projects. We had proposed that the JV could initially take up projects allotted to NHPC, which are still to commence development for various reasons. The merits of L&Ts participation in the joint development of projects allotted to NHPC were discussed. Given this, L&T holding 74% in projects allotted to NHPC did not find favour with the NHPC team.
In a last ditch effort, Naik has asked NHPC to reconsider L&Ts proposal for a JV with 74% participation by L&T and 26% by NHPC. He told NHPC that this JV would help the country achieve its targets on the hydroelectric power front. If you think there is merit in continuing dialogue towards this end, the task force (comprising senior NHPC and L&T officials) can continue to meet to take it further, Naik told NHPC CMD SK Garg.
NHPC, for its part, has maintained that it was open to L&Ts proposal for its participation with up to 26% in equity for specific new projects. As this would call for a specific proposal for an identified project, L&T has told NHPC that this could be considered as and when such an opportunity arises. Despite repeated attempts, Garg could not be contacted for comment.