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NTPC plans Rs 15-billion public float

Anil Sasi

The National Thermal Power Corporation is gearing up to tap the capital market with an initial public offer (IPO) of about Rs 15 billion.

This will make NTPC the first public sector undertaking to launch an IPO since the Videsh Sanchar Nigam Ltd issue in 1999.

Senior NTPC officials told Business Standard that the funds would be utilised to bridge the resource gap of around Rs 80 billion for capacity addition over the next five years.

"The number of shares to be offered and the price are yet to be determined," a senior official said.

In the Tenth Five Year Plan (2002-2007), NTPC is planning to add 9,100 mw, of which the generation of around 4,000 mw will be funded through internal resources.

The company has sought government support of Rs 130 billion for the balance 5,100 mw. However, the Centre is likely to release around Rs 50 billion.

NTPC has appointed ICICI Securities and SBI Capital Markets to suggest alternative means of raising funds.

The two merchant bankers will submit their plans by the end of May. NTPC officials said the decision to tap the capital market would have to be cleared by the Centre. The IPO is being planned in the second half of 2002-03.

The proposed IPO assumes significance because of the divestment ministry's focus on divesting government stakes in energy companies to meet its budget targets. However, NTPC is opposed to this and has written to the power ministry, expressing reservations about divestment when its earnings are low.

The company was exploring other funding options - IPO, budgetary support or roping in joint venture partners - to meet its financial needs, officials said.

This resource crunch follows the implementation of the availability-based tariff order of the Central Electricity Regulatory Commission. NTPC claims the order will adversely affect its revenues over the next 10 years.

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