Indian government to sell hydroelectricity asset for $55m

Indian government approves $55 million pricing of hydroelectricity asset and appoints bankers for disinvestment by OFS.

The Inter-Ministerial Group on disinvestment (IMGD) has approved selling, through an offer for sale (OFS), an 11.4 percent of its stake in Delhi-based National Hydroelectric Power Corporation Limited (NHPC) keeping a majority stake in the profitable public enterprise.

This follows the recommendation by the Department of Disinvestment earlier this month for the government to price its payout at Cr332.2 ($55 million; €41 million), setting a dividend at 3%_ Re 0.30 per equity share ($0.005; €0.004) on the paid up share capital of the company for the financial year 2013-2014.

According to local press, an IMGD official said today the department was about to hire a third banker to work on the offer for sale.

“The [Department of Disinvestment] will soon float a request for proposal to select merchant bankers who will manage the stake sale,” said the official.

The government holds 85.96 percent stake in NHPC. The sale will allow the company to reach the minimum 25 percent public shareholding imposed by the market regulator SEBI in order to access public markets.

According to a company statement, the current market price for the shares is $0.4 (Rs 24) a piece, sale of 11.4 percent for 125.76 crore shares (1.26m).

NHPC today has more than 166 million shareholders.

NHPC is one of the country’s 71 public service enterprises (PSE) boasting a miniratna status. A miniratna category-I enterprise with an authorised share capital of Rs. 1,50,000 Million . Miniratna category I enterprises are ones which have made profits continuously for the last three years or earned a net profit of $5 million or more in one of the three years. From this classification will derive investment ceilings. A miniratna investment ceiling is set at $83m (500 crore) or their net worth, whichever is lower.

According to a company statement, it has an investment base of over Rs. 3,87,180 million and is ranked among the top ten companies in the country in terms of investment.

Since inception in 1975 NHPC has completed 20 projects with a total installed capacity of 6507 megawatts (MW) which includes 1520 MW through NHDC Limited – a Joint Venture of NHPC with Government of Madhya Pradesh. Four projects with a total installed capacity of 3,290 MW are currently under execution.

The company has a strong pipeline of projects of 5,115MW capacity at various stages of permitting process.

It is working on capacity addition of 2,186 MW through Joint Ventures with state governments and public sector undertakings (PSU), while three projects, totaling a capacity of 1,350 MW are under survey and investigation stage.

The Company is actively seeking to enter Thermal, Wind and Solar Power generation.