State-run NTPC Ltd will form a new subsidiary for some identified renewable energy projects with the aim to monetise it by October, the company’s management told investors in a conference call on January 29.
The power utility is scaling up its investment in renewable energy portfolio by investing in it 40-45 percent of its capital expenditure in financial year (FY) 2022, and FY23.
“Today our board has decided that certain identified solar energy assets will be transferred to a separate special purpose vehicle or a subsidiary, for which we will be seeking an exemption from the Government of India from capital gains tax. As soon as that is available, we will be monetising it, most probably by October 2022,” said AK Gautam, director (finance).
In a disclosure to the bourses, NTPC said that the board has approved an asset monetization proposal that will entail hiving off certain assets of NTPC and its subsidiary NTPC Renewable Energy Limited (NTPC REL) to a wholly-owned company.
The asset monetization would be either through an initial public offer (IPO) or stake sale to strategic investors.
According to the company’s website, NTPC’s group installed capacity is 67,907.5 megawatts (MW), which includes 13,675 MW through joint ventures and subsidiaries. This includes plants that run on coal (56,184 MW), gas and liquid fuel (6,515 MW), hydropower (3,725 MW), and renewable energy (1,487.5).
On January 29, NTPC reported consolidated profit of Rs 4,626.11 crore in the December 2021 quarter, up from Rs 3,876.36 crore in the corresponding period of previous fiscal. The consolidated total income was Rs 33,783.62 crore in Q3FY22 as against Rs 28,387.27 crore a year ago.
Shares of the company closed on Friday at Rs 140.20 a piece on the BSE, up 3.9% from the previous close.Capex push for renewables
NTPC has a capital expenditure target of Rs 23,736 crore for FY22, of which the company has already invested 90% so far in the year. The capex for FY23 is pegged at Rs 22,454 crore and it has firmed up plans for Rs 18,921 of capex in FY24 so far, which may increase going ahead.
The company’s management said that for the next two years, renewable energy would account for 40-45 percent of capex but the share will progressively increase beyond that.
While NTPC has been has been investing upgrading its thermal power plants, improving efficiency and reducing its carbon footprint, its push in the renewable energy sector comes at a time when private sector players, including conglomerates like the Adani Group and Tata group, have already built considerable capacity.
The company’s push on renewables is in line with India’s ambitious target to have half of its energy mix from non-fossil fuel sources by 2030. At COP26 (Conference of the Parties) summit in Glasgow, Prime Minister Narendra Modi increased the target India has set renewable energy capacity. He said India would aim to build 500 gigawatts (GW) from around 150 GW now.