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NTPC seeks equity ceiling waiver

Power sector behemoth NTPC has sought the government’s approval for waiver of ceiling of Rs 1,000 crore for equity investment to execute projects of state governments, reports Samiran Saha.

business Updated: Jan 27, 2008 22:44 IST
Samiran Saha

Power sector behemoth NTPC has sought the government’s approval for waiver of ceiling of Rs 1,000 crore for equity investment to execute projects of state governments either through joint ventures or wholly-owned subsidiaries.

The power behemoth has submitted Request for Qualification (RFQ) documents for projects at Shahpura in Madhya Pradesh (1,500 MW), Bara in Uttar Pradesh (1980 MW) Karchana, UP (1,320 MW), Maharashtra Industrial Develipment Corporation, Special Economic Zone at Bhadravati (1,320 MW) and three projects in Karnataka at Chamalpura, Ghataprabha and Jeawagari, each of (1,320 MW).

Since NTPC cannot invest more than Rs 1,000 crore as equity in an individual special purpose vehicle company without government approval it has approached the government for waiver for investment in the seven power projects. In each of these seven upcoming projects the equity component is over Rs 1,500 crore.

NTPC was earlier granted waiver for bidding in the ultra mega power projects (UMPP) by the Cabinet Committee on Economic Affairs, although it did not win any of the three UMPPs that have been awarded to private power companies.

NTPC has earmarked an investment of whopping Rs 11,776 crore or nearly $3 billion as equity in seven power projects that it will bid under the second round of competitive bidding process by the state distribution companies.

Since power projects are being funded in the debt equity ratio of 70:30, the equity component will be Rs 11,776 crore, where as the debt component will be around Rs 28,000 crore at an investment of over Rs 40,000 crore.