Post ONGC-HPCL deal, NHPC-NTPC mega merger on the cards: Report

AFTER the successful merger of HPCL with ONGC, it has been reported that the government is now planning to sell a stake of its hydro-power producer NHPC to its other state-owned NTPC, which is the country’s largest electricity generator by capacity. However, Investors have shown mixed emotions over this deal as they boosted NHPC share price but sold NTPC shares heavily.
Media reports quoting sources said that the talks...
are at an initial stage and a deal is unlikely to be concluded this fiscal year, although the government plans to complete some formalities before March. Reportedly, the government’s stake of 73.67 percent in NHPC is valued at Rs 182 billion (Rs. 18,200 crore) at current market price.
The discussions point to the government’s plans to consolidate state-run energy companies to give them global size and scale, apart from helping it to boost revenue collections and stick to its budget gap target.
It is believed that, the sale would drive NTPC’s green portfolio as the predominantly coal-burning generator makes a gradual shift away from fossil fuels.
Recently, ONGC acquired 51.11 percent stake in HPCL by paying about Rs 36,915 crore to the government, from which about Rs 12,000 crore will be done by cash and remaining by short-term borrowing. In the month of July 2017, the Union Cabinet gave in-principle nod for the sale of government's stake in HPCL to ONGC.
The above mentioned two deal first the ONGC - HPCL and now the NTPC - NHPC is government’s move to achieve disinvestment target. The government has hiked the disinvestment target by over 10% to Rs 80,000 crore in FY19.
Talks are at an initial stage and a deal is unlikely to be concluded this fiscal year, although the government plans to complete some formalities before March, the people said. NHPC surged as much as 9.7 percent before closing 3.9 percent higher at Rs. 24.15.
The discussions point to the government’s plans to consolidate state-run energy companies to give them global size and scale, apart from helping it to boost revenue collections and stick to its budget gap target. The sale, if approved, will be the second such consolidation after state-run Oil and Natural Gas Corp. acquired the government’s stake in oil refiner Hindustan Petroleum Corp. for Rs. 36,900 crore.
The sale will boost NTPC’s green portfolio as the predominantly coal-burning generator makes a gradual shift away from fossil fuels. NTPC last year sought to acquire the federal government’s stake in another hydro-electricity generator SJVN Ltd., but it hasn’t been able to forge a deal yet.
In a related development NTPC said its board will this week consider proposal to raise up to Rs 12,000 crore through issuance of non-convertible debentures.
The board will meet on July 28, the PSU said in a filing to BSE.
"The board shall also, inter-alia, consider and approve issue of secured/unsecured, redeemable, taxable/tax-free, cumulative/ non-cumulative, non-convertible debentures up to Rs 12,000 crore," the company said in a filing to BSE.
The fund will be raised "during the period commencing from the date of passing of special resolution in the ensuing annual general meeting till completion of one year thereof or the date of next annual general meeting in the financial year 2019-20 whichever is earlier", it added.
The power giant had earlier said it has recorded its highest quarterly power generation of 69.2 billion units (BU) in April-June this fiscal, which is 7.45 per cent increase over the same period previous fiscal.
The company has total installed capacity of 53,651 MW from its 21 coal based, seven gas based, 11 solar PV, one hydro, one small hydro, one wind and nine subsidiaries/joint venture power stations.
NTPC is currently implementing an additional capacity of over 20,000 MW at multiple locations across the country.