NTPC transfers 3,000 MW renewable energy assets to its subsidiary

NTPC: NTPC Q3 numbers ahead of analysts' expectations. Profit rises 5.4% YoY to Rs 4,476 crore, revenue jumps 37% to Rs 41,411 crore. The country's largest power generation company has recorded a 5.4% year-on-year growth in standalone profit at Rs 4,476 crore impacted by lower operating margin performance. Revenue grew by 37% YoY to Rs 41,411 crore compared to year-ago period. At the operating level, EBITDA jumped 36% to Rs 13,239 crore, but margin fell by 15 bps to 31.97% YoY, for the quarter. The gross generation grew by 3.93% to 78.64 billion units and installed capacity rose by 3,127 MW to 70,884 MW compared to same period last year.

Moving a step closer to its plan of monetising its renewable energy assets, NTPC Limited has completed the transfer of 15 such assets with a total capacity of nearly 3,000 megawatt (MW) to its newly created subsidiary NTPC Green Energy Limited (NGEL), the government said in a statement on March 1.

With the transfer now completed, the state-run power generator is planning to offload 10 to 20 percent stake in NGEL, a senior NTPC official said, requesting anonymity.

“Under the aegis of the National Monetisation Pipeline of the government of India, NTPC Limited completed the closing of the transactions in relation to consolidating its renewable energy (RE) portfolio under one umbrella entity – NGEL - on February 28. This is a transfer of RE assets/entities owned by NTPC to NGEL, its wholly owned subsidiary, incorporated on April 7, 2022,” read the statement.

“The transactions comprised transfer of 15 RE assets, through a Business Transfer Agreement (BTA), and the transfer of 100 percent equity shareholding of NTPC Renewable Energy Limited (NREL), a wholly owned subsidiary of NTPC, through a Share Purchase Agreement (SPA), executed on July 08, 2022. This scheme has been implemented as a part of the corporate business plan of the group to provide an impetus to its focus on achieving the 60 gigawatt (GW) RE capacity target by FY 2032,” it said.

The consideration for transferring the 15 assets was Rs 10,066.99 crore, according to NTPC Limited. The consideration for the stake transfer of NREL to NGEL was Rs 731.17 crore.

On August 23, 2021, the government announced the NMP with the aim to monetise existing infrastructure assets to raise funds to finance future projects. The ambitious plan sought to lure private sector investment in infrastructure that had low project execution risk to bridge the gap between the need and availability of capex-intensive infrastructure sector.

Asset monetisation involves creation of new sources of revenue by unlocking the value of the otherwise unutilized or underutilized public assets. It is globally recognised that public assets are a significant resource for the economy. In this, the government and its entities conduct monetization of ‘rights’ not ‘ownership’ with assets being handed back to the government at the end of transaction life.

The estimated aggregate monetisation potential under NMP is Rs 6 lakh crore through core assets of the central government, over a four-year period from FY20-25.