Hydropower mega-merger of NHPC, two others put on hold

NHPC Ltd had made a proposal to the power ministry recently to merge THDC India Ltd and North Eastern Electric Power Corp. Ltd (Neepco) with itself, the people said on condition of anonymity.

The plan was to bring together their diverse experience to boost hydropower and provide uninterrupted electricity when solar power is unavailable. NHPC has experience working in remote areas, THDC has expertise in building large projects, and Neepco is focused on the north-eastern region.

“NHPC had submitted its report proposing the merger and the matter was discussed in the ministry. The ministry also has to take clearance from Dipam (Department of Investment and Public Asset Management), which had taken a decision a few years ago to transfer shares of THDC and Neepco to NTPC. To reverse this decision now would be difficult. So, for now, it’s on hold," one of the two people cited above said.

NHPC chairman and managing director Rajeev Kumar Vishnoi, who also heads THDC, told Mint in May that the merged entity may have a market capitalization of around ₹70,000 crore. The market cap of NHPC, the largest of the three, which was around ₹44,157.97 crore at the time, has since grown to ₹66,377.59 crore.

Replying to a query from Mint, an NHPC spokesperson, however, said on Monday: “There is no concrete proposal under consideration by the management of NHPC for the merger/acquisition of THDC and Neepco with NHPC Ltd."

Queries sent to the power ministry, NTPC, Neepco and THDC remained unanswered till press time.

Earlier this year, power minister R.K. Singh had said the government is considering a merger of public sector hydropower companies to improve efficiency and reduce costs.

In August, Moneycontrol reported that NHPC would need at least ₹11,000 crore to acquire THDC India and Neepco.

Both THDC and Neepco are currently owned by state-run thermal power major NTPC. In March 2020, NTPC had acquired the Centre’s stake in the two companies for about ₹11,500 crore.

NHPC’s total installed capacity as on 30 September was 7,097.20MW (including 1,546MW in joint ventures), comprising 6,971.20MW from 22 hydropower stations, 76MW from two solar power projects and 50MW from a wind power project.

NHPC’s hydro capacity is about 13.4% of the country’s total installed hydro capacity of 52GW.

NHPC has ambitious plans in the growing pump storage projects (PSP) segment, with planned investments of up to ₹1.76 trillion for storage capacities of 20,000-22,000MW. It has signed agreements in states including Odisha and Maharashtra for setting up PSPs.

THDC was set up to develop, operate and maintain the 2,400MW Tehri hydropower complex and other hydro projects. However, it currently operates several projects.

Incorporated in 1976 to plan, construct, operate and maintain power stations in the north eastern region, Neepco operates one solar, six hydro and three thermal power stations with a combined installed capacity of 2,057MW.

The decision to hold the proposal to merge the three entities also comes at a time when the government is reworking its draft hydropower policy.

That is because the Prime Minister’s office has directed the power ministry to carve out the ₹4,000 crore grant for the north-eastern states to pick up stake in hydro projects as a separate scheme, and come up with a wholesome policy with more incentives.