Asset monetisation: NTPC plans to float IPOs; to list three subsidiaries, exit joint venture with SAIL

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October 04, 2021 4:45 AM

NTPC had acquired 100% equity in NEEPCO, which is primarily engaged in generating and supplying electricity in the northeastern region, from the Government of India in March, 2020.

NTPC subsidiaryThese transactions are cumulatively expected to fetch around Rs 39,832 crore.

As part of the asset monetisation drive, state-run power producer NTPC is planning to float IPOs of its wholly-owned subsidiaries, NTPC Renewable Energy (NREL), North Eastern Electric Power Corporation (NEEPCO) and NTPC Vidyut Vyapar Nigam (NVVNL). It will also exit NTPC-SAIL Power Company (NSPC), a 50:50 joint venture between NTPC and SAIL, which owns 814 MW of captive power plants at SAIL’s steel manufacturing units at Durgapur, Rourkela and Bhilai.

A senior executive at the company said that the public listings and stake sale are expected to raise Rs 15,000 crore. The target is to conclude all the three IPOs by March, 2024. At FY21-end, the net worth of NEEPCO was Rs 6,450 crore and that of NVVNL was Rs 370 crore. NSPCL had a net worth of Rs 2,742 crore at the end of FY20. The government has said that 3,472 MW of hydro power and 2,494 MW of renewable assets — owned by NTPC, NHPC, Satluj Jal Vidyut Nigam and NLC (formerly Neyveli Lignite Corporation) — will be offered to the private sector by FY25 under the asset monetisation programme.

These transactions are cumulatively expected to fetch around Rs 39,832 crore.

The government has not prescribed any mandatory method for asset monetisation, and said that models to be adopted will depend upon various factors including “asset profile, objectives for monetisation, expectations of sponsor and investors”.

The IPO process of NREL — through which NTPC plans to set up all its new renewable capacity — is expected to be complete in Q3FY23, the source said.

NTPC had incorporated NREL to focus on its green energy business in October, 2020, and its IPO is seen to unlock significant value given the market performance of other renewable energy companies which have much lower capacity addition targets. The company aims to attain 60,000 MW of green capacity by 2032 from the current level of around 1,400 MW, and wants to have 8,000 MW of installed renewable energy base by FY23. “NREL should be bigger than NTPC in times to come,” the aforementioned person added.

NTPC had acquired 100% equity stake in NEEPCO, which is primarily engaged in generating and supplying electricity in the northeastern region, from the Government of India in March, 2020. It operates seven hydro (1,525), three gas-based (527 MW) and one solar (5 MW) power stations, including the 600 MW Kameng hydro project. Recently, the Union power ministry has advised NEEPCO to reduce its manpower/megawatt strength from current high levels. It has also been directed to diversify operations into renewable energy and expand business across the country. Subsequently, NEEPCO signed an MoU with state-run Indian Renewable Energy Development Agency for developing a five-year action plan for building and acquiring renewable energy projects.

NVVNL is mainly engaged in the power trading business, and is the government-nominated agency for settlement of cross-border grid operation related charges with Bangladesh, Bhutan, Nepal and Myanmar. It has implementing solar projects at identified airports and buildings through MoUs with the Airport authority of India, South Delhi Municipal Corporation and IIT Jodhpur. NVVNL is also slated to supply 40 electric buses in Andaman and Nicobar Islands and 90 electric buses to the Bengaluru Metropolitan Transport Corporation. It has undertaken pilot projects on green hydrogen as well, to be carried out in Leh and Delhi with ten hydrogen fuel cell electric buses.

The Rs 6 lakh crore national monetisation pipeline consists of projects worth more than `1.6 lakh crore in the energy sector, which also include oil and gas pipelines of GAIL, Indian Oil Corporation and Hindustan Petroleum Corporation and electricity transmission lines of Power Grid Corporation of India.

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