Investment cap on PSU ventures may be waived

North Block wants more details before giving its nod for CCEA approval.

In an attempt to provide greater flexibility in setting up of the showpiece ultra mega power projects, the power ministry has moved a proposal seeking to do away with the existing Rs 1,000-crore investment ceiling applicable to public sector units for forming joint ventures.

A draft note to this effect has been put up for the consideration of the Cabinet Committee on Economic Affairs (CCEA). The finance ministry is considering the proposal.

"North Block has sought further details before giving its nod for ultimate CCEA approval," ministry sources said.

The ministry has also asked for information on public sector power major NTPC's intention to bid for all ultra mega power projects. It has further sought clarity on the company's plans for forming a consortium for the purpose, the sources added.

There is a financial limit of Rs 1,000 crore applicable to "navratna" companies for setting up joint venture companies. This limit is a hindrance in NTPC's plans for setting up financial joint ventures and wholly owned subsidiaries for the ultra mega power projects.

Each such project will be of 4000 Mw capacity and will involve investments of between Rs 16,000 and Rs 20,000 crore, depending on the location.

NTPC has already submitted its bid for the Sasan coal pithead project in Madhya Pradesh.

"Once we get the waiver, it will help us bid for more such projects," Chairman & Managing Director T Sankaralingam said. Another senior NTPC executive said: "We are yet to receive the approval for the waiver and will consider forming JVs and wholly owned subsidiaries on a case-to-case basis."

Power ministry sources said, "The move will help NTPC raise more resources, as each of the coal pithead projects may involve an investment of around Rs 16,000 crore, while the investment will be around Rs 20,000 crore in the case of coastal projects."

NTPC plans to form a consortium with Bharat Heavy Electricals Ltd for the projects. BHEL may participate by either taking some equity or by undertaking the engineering, procurement and construction work for the projects.

"NTPC is in touch with us, and we will be happy to respond," a senior BHEL executive had earlier said.