Hydro power merger plan loses steam

Smaller companies oppose proposal to be merged with NHPC; PowerMin asks for final report by mid-September

A plan to merge all hydro power companies into a single entity is likely to be shelved, following resistance from smaller companies, especially SJVN and North Eastern Electric Power Corporation (NEEPCO). Hydro plants owned by the West Bengal state government were the only ones to back the proposal.

Now, government officials are terming the plan "an idea that was discussed to look into its possibility, which is bleak".

Officials and company executives privy to the matter said the merger was the brainchild of NHPC, which wanted to spearhead the proposed hydro behemoth. "The idea emerged at a meeting with public sector companies; the minister wanted to understand its viability. NHPC went a step ahead in pushing the agenda through the government's table," said a senior power ministry official.

NHPC has, however, denied pushing the merger. The company is India's largest hydro power producer, with an installed capacity of 5,702 Mw. The country's cumulative hydro capacity stands at 40,798 Mw.

Another official said the merger involved various challenges and would require micro-level discussions and changes, which weren't possible overnight. "We can't just toy with a fancy idea. Before any such major leap, the consequences need be forecast," he said.

The power ministry has asked the chairmen and managing directors of THDC, NEEPCO and SJVNL to send a final consideration report on merging all hydro entities by mid-September. These companies have already expressed dissent to the idea.

When contacted, a senior SJVNL executive refused to comment on the content of the report. He said the company would stick to its stand.

An official said the report would look into physical, human and regional issues of the proposal.

A report prepared by SBI Caps at the behest of NHPC said the mega entity to control all Centre-run hydro power companies was likely to have market capitalisation of Rs 51,000 crore and government stake of up to 81 per cent. The 10-page report forecast an annual profit after tax of Rs 2,931 crore for the merged organisation.

"The report looked at the larger benefits of the sector, especially for financially weak companies. We had prepared the report on the merger, following an indication by the government," said a senior NHPC executive.

The report had drawn the ire of smaller companies. In a letter to the power ministry, SJVNL had said it wasn't informed about the preparation of the report.

"The concept paper on 'integration of central hydro PSUs in India, prepared by SBI Caps, was not discussed by NHPC with any of the chairmen and managing directors before it was given to the ministry. Further, certain facts have not been truly and appropriately reflected in the report," the letter said.
IN LIMBO
Companies' profile

NHPC
Installed capacity: 5,702 Mw
Net worth: Rs 26,000 cr

North Eastern Electric Power Corporation Limited (NEEPCO)

Installed capacity: 1,130 Mw, ie, 47% of the total installed capacity of the Northeastern region
Net worth: Rs 5,004.70 cr

Tehri Hydro Development Corporation Ltd (THDC)
Operational: 2,400 Mw Installed capacity: 8,796 Mw under implementation
Paid-up share capital: Rs 3,443 cr

Satluj Jal Vidyut Nigam (SJVN)
Installed capacity: 1,500 Mw
Paid-up share capital: Rs 4,136 cr