NTPC to list green energy arm in FY24; strategic investment plan fails

Intends to raise over Rs 5,000 crore through IPO

India’s largest power-generating company NTPC will publicly list its newly formed green energy arm – NTPC Green Energy (NGEL) – in 2023-24 (FY24).

The company houses all the green energy and green fuel projects of the parent entity and aims at building 60 gigawatt (Gw) of green energy portfolio by 2030 - 3x of its planned new thermal capacity.

The decision to go for an initial public offering (IPO) has come after talks failed to make any headway in getting a strategic investor aboard NGEL, said senior executives. They added the company is targeting to raise close to or more than Rs 5,000 crore. SBI Capital Markets has been appointed the transaction advisor.

India’s largest power-generation company in 2022-23 was looking for a strategic investor for NGEL. Approximately 11 companies evinced interest.

NTPC had planned to trim a 20-25 per cent stake in NGEL for an expected valuation of Rs 2,000 crore. Malaysian oil and gas company Petroliam Nasional Berhad (Petronas), global steel major ArcelorMittal, Canada Pension Plan Investment Board, Brookfield, Abu Dhabi’s TAQA, and National Investment and Infrastructure Fund had submitted bids.

Of these, Petronas was in the last leg of discussions but the talks fell through over the deal valuation, informed sources.

“NTPC wanted a higher valuation than what was proposed by the bidder. For that, the company needed Cabinet approval which came too close to the end of the fiscal year. Also, there was disagreement between the two parties over the valuation figure,” said a source privy to the details.

For the IPO, NTPC will not sell stake in NGEL, but rather do book building, said an official.

NTPC, which is building close to 20 Gw of thermal power projects, is looking to offset its Scope 1 emission (direct carbon emissions) through NGEL which would not have been possible after cutting back stake to another investor, said sources.

Some of the mega green projects in NGEL’s arsenal include renewable energy projects, green hydrogen, green methanol, and round-the-clock power, among others.

These include setting up a 20-Gw green energy hub in Andhra Pradesh which will have electrolyser and hydrogen manufacturing, and a 6 Gw of pump storage power project.

It is working on a mega solar power park in Gujarat’s Khavda in the Bhuj taluka of Kutch, where it will set up 5 Gw of solar power capacity.

The company is also in the process of inviting expressions of interest for setting up 15 Gw of solar cell and module manufacturing.

The IPO of NGEL will also help NTPC meet its monetisation target for FY24 pegged at Rs 6,000 crore.

NITI Aayog in its National Monetisation Pipeline had identified 6 Gw worth of power-generation assets for monetisation over 2021-22 though 2024-25. These included 3.5 Gw hydel assets and about 2.5 Gw renewable (solar and wind energy).

The Centre can fetch about Rs 39,832 crore from power-generation assets, according to the government think tank. 

NTPC to ramp up coal capacity to 5.8 Gw

Thermal power behemoth NTPC will build close to 5.8 gigawatt (Gw) of coal-based capacity this year. Of these four, the 1.3 Gw Talcher power plant in Odisha is already under construction and state-owned Bharat Heavy Electricals is the engineering, procurement, and construction (EPC) contractor for it.

For the 1.6-Gw Lara super thermal power plant (STPP) in Chhattisgarh, bids have been called for EPC. Officials said they will be tendered this year.

The other two projects in the pipeline are 1.6 Gw Singrauli STPP in Uttar Pradesh (UP) and 1.3 Gw Meja Urja Nigam (UP).

All plants will be built as supercritical thermal units aiming at being fuel- and emission-efficient.