Ministry seeks Cabinet nod for NHPC issue

The power ministry has kicked off its ambitious initial public offer (IPO) programme, which involves diluting stakes in seven government-owned companies before the end of this fiscal.

It has circulated a draft cabinet note seeking approval for offering up to 24 per cent of the paid-up capital of National Hydroelectric Power Corporation (NHPC) to the public.

"While 24 per cent is the upper ceiling, NHPC may only go in for a 10 per cent IPO of its paid-up capital," a top power ministry official said.

The money mobilised will not only ease the gross budgetary support from the power ministry, of which the largest chunk goes to NHPC, but will also fund capacity additions planned for the next five years.

The hydroelectric power major plans to add capacity of around 5,837 Mw in the Eleventh Five-Year Plan (2007-12), a period for which it has budgeted an investment of around Rs 40,467 crore. NHPC has an authorised capital of Rs 15,000 crore and a paid-up capital of Rs 10,349 crore. The corporation clocked a net profit of Rs 743 crore in the last financial year.

The other power companies slated for IPOs by the end of this fiscal include Power Finance Corporation, Rural Electrification Corporation, North Eastern Electric Power Corporation Ltd, Satluj Jal Vidyut Nigam Ltd and Tehri Hydro Development Corporation Ltd.

The ministry wants the power companies to organise their own resources to meet their annual expenditure without depending on gross budgetary support from the government.