National Hydroelectric Power Corp. (NHPC), the country’s largest hydroelectric power generation company, plans to raise Rs28,000 crore in equity and debt over the next five years to help fund an increase in its power generation capacity to 10,000MW by 2012, to keep up with the needs of an economy that expanded at 9.4% last year and is expected to grow at over 8% this year.
The investment planned is 133% more than what was invested in the 10th Plan.
S.K. Garg, the chairman and managing director of NHPC said Rs17,000 crore of the Rs28,000 crore would be debt with the rest being equity. “There is no immediate need of funds right now, but as and when our projects undergo implementation, we will be requiring funds,” he added.
The company was in talks with multilateral lending agencies (such as the Asian Development Bank), overseas banks, Life Insurance Corp., domestic banks such as State Bank of India, Power Finance Corp. and other firms.
NHPC hopes to attract investments (up to $2 billion) from Saudi Arabia, Qatar, the United Arab Emirates and Kuwait as these economies have large cash surpluses, but are reluctant to invest in US government bonds. Investors are looking at alternatives in countries such as India.
The company had initially identified its 3,000 MW Dibang project for targeting participation by West Asian countries. It hopes that participation from these countries will also come in its new projects such as those at Tawang (1,500MW), Kishan Ganga (330MW), and Kotli Bahal (1,100MW).
“We are open to debt funding or equity participation for these projects. In the case of equity participation, we will be the majority shareholder,” said Garg.
NHPC has a current installed capacity of 4,200MW and added 1,917MW during the 10th Plan period (2002-07). The company is currently engaged in the construction of 12 projects aggregating a total installed capacity of 5,322MW.
A senior power sector analyst based in Mumbai who asked not to identified because of commercial considerations said that NHPC’s plan of becoming “a 10,000MW company is too ambitious” to achieve. “Historically, it has not been very successful. In 32 years of existence, it could only manage 4,200MW,” he added.
NHPC registered a net profit of Rs925 crore in 2006-07 on a turnover of Rs1,963 crore. It deferred plans to come out with an initial public offering as it does not have the requisite number of independent directors on its board as stipulated under Clause 49 of the listing agreement between publicly-listed companies and stock exchanges.