NTPC Keen On Buying Centre’s Entire Stake In SJVN, Says Official

National Thermal Power Corporation Ltd., according to a senior company official, is planning to buy the central government's entire stake in Satluj Jan Vidyut Nigam Ltd.

NTPC is keen to acquire government's full 63.79 percent stake in SJVN and may want to merge the hydel power generator with itself, the official of India's largest electricty producer told BloombergQuint on the condition of anonymity. The NTPC hasn't received any communication from the government yet, the official said. At the current market prices, the government's stake in SJVN is worth Rs 6,530 crore.

The power company's interest to buy the government's stake comes when the Modi administration is looking at ways to meet its Rs 80,000-crore divestment target—it has so far raised Rs 32,737 crore. The cabinet on Dec. 6 approved sale of the government's 52 percent stake—worth more than Rs 11,000 crore at current prices—in REC Ltd. to state-run peer Power Finance Corporation Ltd. That mirrors Oil and Natural Gas Corporation Ltd.'s buyout of the government's stake in Hindustan Petroleum Corporation Ltd., a deal that helped it exceed the divestment target in 2017-18.

Shimla-based SJVN, a publicly listed company that operates hydro and wind power projects in various states is 63.79 percent owned by the central government and 26.85 percent by Himachal Pradesh, according to its website. The rest of the stake is with mutual funds, non-banking financial companies and foreign portfolio investors.

According to the official quoted earlier, there is a merit in NTPC buying SJVN as it wants to diversify from just being a thermal power company. India's largest power producer plans its expansion through brownfield acquisitions, the official said, adding that the state-run power producer is looking to more than double its existing generation capacity to 130 gigawatts by 2030.

It is also looking to reduce its coal-based power capacity by buying hydro and solar power projects. There is an energy transition underway and the percentage share of coal-based power generation will have to come down in the overall energy mix, the official said.

The proposed acquisition, however, is stuck because of resistance from the Himachal Pradesh government which fears the deal will erode its equity stake, leaving the state government without any say in the company's affairs, he said.

NTPC is also looking to invest in renewable energy. The company is interested in bidding for government's 7,500 megawatts of solar projects in Leh and Kargil region of Jammu and Kashmir, the official said, adding that it doesn't rule out a separate company for renewables in future.