NTPC mulls fresh offers for stake in green unit after top bidder pulls out

By Rajesh Kumar Singh

India’s state power giant NTPC Ltd. is considering seeking fresh offers for a stake in its green unit after the top bidder pulled out, a development that highlights the challenges the nation faces in rapidly developing its renewables industry to meet climate goals.
 

Malaysian oil major Petroliam Nasional Bhd. made the highest offer of nearly 41.3 billion rupees ($503 million) for a 20% stake in NTPC Green Energy Ltd., according to people familiar with the matter. But Petronas later retracted the bid, saying the stake was too small and won’t give it a seat on the unit’s board, the people said, asking not to be named as the discussions are private. 

Petronas’s bid would have valued NTPC Green at about 206.5 billion rupees.

NTPC and Petronas declined to comment.

The difficulties of India’s largest power producer to find an investor spotlight the issues that have slowed India’s efforts in adding capacity to its renewables industry. Prime Minister Narendra Modi’s bid to champion domestic manufacturing has created trade barriers that are hampering development of renewables projects and raising costs. Rising interest rates have also made capital more expensive. 

In addition, soaring demand and attractive subsidies for clean energy in developed markets, such as the US and the European Union, is weaning some investors away from India.    

Climate Goals
 

India is aiming for the share of clean sources in the nation’s power-generation capacity to surge to 90% by 2047 — more than double from now — to meet its climate goals, federal Power Secretary Alok Kumar said earlier this month.

NTPC’s tender offer last year drew initial interest from 13 companies, including Brookfield Asset Management Inc., Canada Pension Plan Investment Board and Abu Dhabi National Energy Co. Of these, only three companies — Petronas, Indian power lender REC Ltd. and gas retailer Indraprastha Gas Ltd. — put in final bids. 

Spokespersons at REC and Indraprastha Gas didn’t respond to an email seeking comment. 

The fiscal year ended in March was expected to be a significant milestone for NTPC Green, the face of transition for the country’s biggest coal consumer. The company had decided to rope in a marquee investor and follow it up with an initial public offer during the year. Neither of those plans came to fruition.  

NTPC is emerging as one of the leading champions of energy transition in the country, with investments planned in renewable energy parks, green hydrogen and electric-vehicle charging systems. The New Delhi-based company still runs nearly 90% of its 72 gigawatts generation capacity on fossil fuels. It plans to expand capacity to 130 gigawatts by 2032, with clean energy making up for almost half of that target.