Ministry pushes for IPOs of power PSUs

The initial public offer proposals of the National Hydroelectric Power Corporation and the PowerGrid Corporation of India Ltd may be sent to the Cabinet for consideration by next month.

The power ministry wants a fresh equity issue of 10 per cent of the existing paid-up capital of the companies and is staunchly opposed to disinvestment.

Despite the negative trend in the equity market, the power ministry is firm about its IPO plans.

"The power ministry is not in favour of disinvestment as the PSUs have a huge programme of setting up power projects. The companies will need to access equity to enhance their net worth and leverage it to get more debt funding. Disinvestment does not allow the proceeds to remain with the company," the official added.

However, in the initial public offer (IPO) plan of the Power Finance Corporation (PFC), the government has offered to sell 5 per cent of its stake, along with a fresh issue of equity shares amounting to 10 per cent of its expanded equity base.

After these two IPOs, the ministry plans a public issue of the Rural Electrification Corporation. This new IPO sequence marks a change in the ministry's plans.

The earlier plans were to follow up the PFC issue by PowerGrid Corporation's IPO and then by public issues of the Rural Electrification Corporation and the National Hydroelectric Power Corporation.

The power ministry wants most public sector power companies to organise financial resources for their annual expenditure without depending on gross budgetary support from the government.