Now, NTPC gears up for its IPO

After oil sector disinvestment, it is the turn of public sector power major National Thermal Power Corporation NTPC to hit the market with...

After oil sector disinvestment, it is the turn of public sector power major National Thermal Power Corporation NTPC to hit the market with an initial public offering IPO of shares representing five per cent of its equity by early August. NTPC had late last year obtained Cabinet approval for the IPO.

8216;8216;We hope to come out with IPO for sale of five per cent of our equity by first fortnight of August,8217;8217; chairman and managing director C P Jain told reporters here at a conference to announce the company8217;s results.

Jain said NTPC would appoint merchant bankers and lead managers for the issue by month-end and the draft prospectus would be filed with capital markets regulator SEBI by May-end by which time the corporation would have finalised audited accounts.

NTPC issue would follow a spate of public issue by power sector undertakings including recent issue by Power Trading Corporation PTC besides another issue lined up by Power Finance Corporation PFC.

NTPC has also decided to seek a review of the tariff order passed recently by power regulator Central Electricity Regulatory Commission. Among other things, the CERC had reduced the return on equity from 16 per cent to 14 per cent for all the power generators with the proviso that the debt component in any project would be 70 per cent of the total cost.

Jain admitted that the previous tariff order had an impact of Rs 1,046 crore during 2003-04 but the corporation posted a net profit of Rs 4,905 crore, up 36 per cent. He, however, declined to give an estimate of the impact of the new tariff, effective from April 1, 2004 and did not comment on the grounds on which NTPC would seek a review of the regulator8217;s order issued late last month.With nearly 20 per cent share of the total installed capacity of the nation, NTPC has embarked upon a major initiative in hydro-electric power.

Construction work on 800 MW Koldam project in Himachal Pradesh had already been awarded and the project was scheduled for commissioning by November 2008, Jain said adding work on two other projects 8212; Lharinag 4X150 MW and Tapovan Vishnugad 4X130 MW 8212; in Uttaranchal would start in the current financial year.

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Aiming at diversification, NTPC had also lined up a slew of projects in the distribution end for which it had already filed an expression of interest to take up circles in Gujarat and Karnataka on franchisee basis.

On the thermal side, the corporation planned to add fresh capacities to the tune of 9,370 MW during 10th plan, of which over 7,000 MW was under construction while 1500 MW had been completed.