Power Minister rules out mega consolidation of power sector PSUs

Power Minister R K Singh Thursday ruled out consolidating all state-owned power sector firms like NTPC, NHPC, SJVNL and PFC into a single entity, saying it would be the biggest company of the world but will not be manageable.

However, the minister said discussions are on regarding merger of some companies under the Power Ministry.

The issue of consolidation in the power sector gained prominence after the government recently approved REC's takeover by the Power Finance Corporation (PFC).

"If it (consolidation of all power sector PSUs) does happen, (then) it will be the biggest company of the world.

"But we have to think about whether it will manageable in the sense that you need managerial focus also and if it become too big and too diverse, it is matter of management control," Singh said at a press conference.

He was replying to a question on whether such a consolidation can happen in the power sector to improve efficiency.

When asked about mergers of some power sector PSUs, he said, "Discussions are happening of and on."

In December 2018, the Cabinet Committee on Economic Affairs approved the sale of the government's 52.63 per cent stake in REC to PFC. The two state-owned firms are non-banking finance companies which fund power sector projects.

The government is expected to garner around ₹15,000 crore from this merger.

Another proposal for SJVNL's takeover by state-run power giant NTPC is also under consideration of the government.

Industry experts said consolidation of firms in the same sector brings efficiency but one has to see that whether it leads to monopoly and also whether the mega entities would be manageable.

Earlier last year, the government had approved dilution of its 51.11 per cent stake in Hindustan Petroleum Corporation Ltd (HPCL) in favour of ONGC in the oil and gas sector.