CCEA nod for higher NTPC investment in its green arm, listing of IREDA
3 min read . Updated: 17 Mar 2023, 09:26 PM IST
Premium- India is working towards low carbon emission NTPC, through this investment in RE sector, and its green energy arm NGEL aims to be the flag bearer of NTPC’s renewable energy journey
The cabinet committee on economic affairs (CCEA) on Friday allowed the state-run thermal power major NTPC to raise its investment in its subsidiary NTPC Green Energy Ltd (NGEL) along with approving the proposal to list the Indian Renewable Energy Development Agency on the stock exchanges.
Currently, the board of a ‘Maharatna’ CPSE can make equity investments to undertake financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad, subject to a ceiling of 15% of the net worth of the concerned CPSE, limited to R 5,000 crores in one project.
NTPC Green Energy Limited is incorporated on 7 April 2022 as a wholly owned subsidiary of NTPC. Post the cabinet approval, NTPC will be able to raise its investment in the company.
An official statement on Friday said that the move would help towards achieving a target of 60 GW renewable energy (RE) capacity by NTPC Ltd. Further, the CCEA also exempted NGEL’s investment in NTPC Renewable Energy Limited (NREL) and its other joint ventures or subsidiaries subject to a ceiling of 15% of its net worth beyond the monetary ceiling of ₹5,000 crore to ₹7,500 crore.
In line with the commitment in COP 26, India is working towards low carbon emission NTPC, through this investment in RE sector, and its green energy arm NGEL aims to be the flag bearer of NTPC’s renewable energy journey and presently has 15 renewable energy assets of 2,861 MW which are operational or nearing commercial operation date (COD) and through its subsidiary NREL (NTPC Renewable Energy Limited) is set to expand its RE portfolio by participating in competitive bidding and multiple emerging opportunities in green energy business.
“The exemption given to NTPC will aid in improving India’s global image as a green economy. It will also decrease India’s dependence on conventional sources of energy by diversifying India’s energy generation and will also decrease the country’s coal import bills. Further, it will also help in ensuring 24*7 power supply to each and every corner of the country," the statement said, adding that the renewable energy project will also generate direct and indirect employment opportunities to the local people at construction stage as well as during O&M stage. The development also comes at a time, when NTPC has been looking to sell its stake in it green energy subsidiary.
In another major development in a boost the renewable energy sector in the country, the CCEA approved the listing of the Indian Renewable Energy Development Agency (IREDA) through the initial public offering (IPO) route. Through the IPO, Centre would partly sell its stake in the company which was recently accorded the status of an infrastructure finance corporation (IFC) by the Reserve Bank of India.
Another statement said that the latest move to list shares of the renewable energy-focused financing company supersedes earlier CCEA decision taken in June, 2017 for allowing IREDA to issue 13.90 crore fresh equity shares of ₹10 each to the public on book building basis through IPO. The instant decision has been necessitated due to change in capital structure following infusion of capital to the tune of ₹1500 crore by the government in March, 2022.
“The Initial Public Offer (IPO) will help in unlocking the value of Government’s investment on one hand and on the other hand will provide an opportunity to the public to acquire stake in the national asset and draw benefits therefrom. Besides, it will help IREDA in raising a part of its capital requirement for meeting growth plans without depending on the public exchequer, and improve governance through greater market discipline and transparency arising from listing requirements and disclosures," it said.
IREDA is currently a wholly owned government of India, Mini-ratna (Category-I) CPSE incorporated in 1987 and is engaged in financing of renewable energy (RE) and energy efficiency (EE) projects in India.
