NHPC scales down acquisition plans

NHPC has written to the power ministry, complaining about the lack of guidelines for mergers & acquisitions in the sector

At a time when the Indian power sector is seeing consolidation, NHPC, the country’s largest hydro power producer, has shelved plans to acquire hydel assets.

NHPC officials said currently, the company had around Rs 5,000 crore in its kitty to acquire about 2,000 Mw of hydro assets. However, “the process of acquiring private companies in the country faces issues of transparency”, said a senior NHPC executive.

The company has written to the power ministry, complaining about the lack of guidelines for mergers & acquisitions in the sector, especially for public sector undertakings seeking to sign deals with private entities. “A year ago, we advertised and several major private sector players showed interest. But the circumstances have changed since then. Besides, without a proper head of the organisation, major decisions are stuck,” said the NHPC executive.

The post of chairman & managing director at NHPC has been vacant since 2011. Currently, A K Dubey, joint secretary in the power ministry, holds additional charge of the post.

“For inorganic growth such as NTPC’s, NHPC needs to put in money as equity… But it might not be practical for NHPC to acquire hydro project developed by private entities because there is no transparent acquisition process for this,” NHPC wrote to the power ministry.

NTPC, India’s largest thermal power producer, has 18 joint ventures and is on the look-out for projects to acquire. Following an expression of interest to acquire thermal units, it received about 30 applications from several companies.

Last month, Reliance CleanGen, a wholly-owned subsidiary of Reliance Power, had signed a memorandum of understanding with Jaiprakash Power Ventures to buy the company’s entire hydropower portfolio. Within a fortnight, Lanco Infratech sold its 1,200-Mw Udupi power plant to Adani Power for Rs 6,000 crore.