NTPC may have to pay Rs 10,000 cr for NEEPCO, THDC hydro power plants

The country's largest power producer NTPC may make an aggressive bid for Centre's stake in two hydro power producing companies -- NEEPCO and THDC -- that is being offered to the company to expand its operations and boost the renewable portfolio.

Official sources said the thermal power generator may offer close to Rs 10,000 crore for picking up the entire stake held by the Centre in the two companies. Though the transaction advisor will come to valuations about the entities later, the portfolio of projects with the NEEPCO and THDC make it a fit case to command good value.

The Centre holds entire 100 per cent stake in NEEPCO that operates close to 1,500 MW of power plants in the northeastern region, it has 75 per cent holding in THDC. The Uttar Pradesh government holds the balance 25 per cent stake in THDC India.

The stake sale would be only disinvestment proposal this year where a state-owned entity would pick up government equity in another public sector undertaking (PSU). In the case of BPCL disinvestment, government is eyeing a private sector global MNC to take its entire equity.

"NEEPCO and THDC fit into the scheme of things for NTPC that has grown its coal fired capacity but is yet to get ointo the big league on renewable. The takeover of the two hydro power generating companies would give a foothold to NPTC in the Northeastern region while also allow synergies with several of its plants in the North of country," said the source quoted earlier.

The transaction is yet to ger nod from the Cabinet.A

Earlier, NTPC was looking at buying Centre's stake in Sutlej Jal Vidyut Nigam Ltd (SJVNL). But despite its interest, the deal could not go through as Himachal government, which also had minority stake in the hydro company refused to part with its shares.

Government has identified NTPC for this strategic sale as it would add value to country's largest shareholder and help the Centre by way of higher dividend payouts. Moreover, NTPC has a stable operational record and decent cash reserve, that could make these buys easy.

Disinvestment department DIPAM has already started the process of disinvestment for NEEPCO and THDC and transaction and legal advisor to the deal would be appointed soon. The plan is to complete the sale before the end of FY20 so that the nmoney flows into Centre's coffers. With less than five months remaining for the year to end, government has a tough task ahead to mobilise record disinvestment proceeds of Rs 1,05,000 crore.