Bowing to political compulsions, the Union power ministry has put the restructuring plans of the National Thermal Power Corporation (NTPC) and other power public sector undertakings (PSUs) on hold.
Confirming this, senior power ministry officials said the restructuring of power PSUs had been put on the backburner due to the politically sensitive issue of divestment suggested by consultants.
They, however, clarified that restructuring could be taken up later, after the government made some headway on ensuring that all electricity connections were metered in the states.
The proposal to divest government equity in corporations such as NTPC had been suggested by SBI Caps and ICICI _ consultants appointed by the power ministry to recommend measures for restructuring the existing power PSUs _ to raise resources for the power sector.
Both ICICI and SBI Caps had been appointed last year to study the possibilities of restructuring Central power undertakings.
Even though the power ministry had expressed its intent to merge National Hydro Power Corporation (NHPC) with NTPC, both the consultants had ruled out this method for raising resources.
Instead, they suggested divestment as the key method of raising funds. This included funds for the hydel sector where the government is expected to make huge investments.
To restructure NTPC, the ministry was considering the divestment of government stake, merger of the National Hydro Power Corporation with NTPC as well as the sale of NTPC assets.
Since the consultants saw no synergy in the merger of NTPC and NHPC, SBI Caps suggested the dilution of 5 per cent of government equity in the state-owned NTPC through an initial public offer in 2002-03.
ICICI also suggested a mix of two divestment processes. The divestment of 26 per cent of the government's stake through private and public placement route and a simultaneous 25 per cent dilution through fresh equity issue to a strategic investor.
