NEW DELHI :
India’s largest power generation utility—NTPC Ltd—-on Thursday announced the Rs11,500 crore acquisition of hydropower firms THDC India Ltd and North Eastern Electric Power Corporation Ltd. (Neepco), as part of one of the government’s largest asset-sale exercises.
The asset sales comes amid a sharp deceleration in Asia’s third-largest economy in the backdrop of the coronavirus outbreak and declining tax collections.
In an announcement to the stock exchanges, the state run utility said that it has inked sales purchase agreements (SPA) for acquiring 74.496% in THDC for Rs7,500 crore and a100% acquisition of Neepco for Rs4,000 crore respectively.
The sale of these public sector units along with there management control is part of a consolidation exercise of the state run hydropower firms, that also holds the key to government meeting its pared disinvestment target for 2019-20 of Rs65,000 crore. It has garnered Rs32,964 crore from asset sales in the current fiscal year.
“The acquisition is subject to satisfaction of customary conditions precedent," NTPC said in its filing to the exchanges.
In 2014, a concept paper on the possibility of a merger of all state-owned hydroelectric companies recommended a phased approach, starting with North Eastern Electric Power Corp Ltd (Neepco) to be combined with NHPC Ltd, followed by THDC India Ltd and SJVN Ltd.
In November, the government had cleared a plan to reduce its stake in certain state-run enterprises to under 51% on a case-to-case basis.
As on 31 March 2018, there were 339 central public sector enterprises with a total paid-up capital of Rs2.5 trillion, and reserves and surpluses of Rs9.42 trillion.
As part of the National Democratic Alliance (NDA) government’s focus on streamlining operations across public sector units (PSUs), state-run firms’ consolidation will continue, finance minister Nirmala Sitharaman had said in her budget speech.
The Narendra Modi administration has set an ambitious Rs2.1 trillion goal in FY21 for the sale of government holding in state-run companies. The disinvestment target for FY21 includes Rs90,000 crore to be raised from an initial public offer in Life Insurance Corp. of India (LIC) and a stake sale in IDBI Bank. The other PSUs up for privatisation include Bharat Petroleum Corporation Ltd (BPCL) and national carrier Air India.
State-run Oil and Natural Gas Corp. (ONGC), which accounts for 73% of India’s oil and gas output, acquired the government’s stake in HPCL for Rs36,915 crore in 2018. In March last year, Power Finance Corp Ltd (PFC) also completed the purchase of a controlling stake in state-run peer REC Ltd to create an $80-billion lending giant by assets. PFC paid Rs14,500 crore to the Union government to buy a 52.63% stake in REC.