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NTPC seeks to acquire stake in India's SJVN for $1.3bn

EBR Staff Writer Published 27 March 2017

India-based power utility NTPC is reportedly planning to acquire stake in hydro-power producer SJVN from the Indian government for $1.3bn.

The proposed acquisition, which has been placed with the Indian Ministry of Department of Investment and Public Asset Management (DIPAM), is part of NTPC’s efforts to boost its share of non-fossil fuel generation capacity.

SJVN, a joint venture between Indian government and Himachal Pradesh government, focuses on generating clean electricity through hydro and wind power projects.

India has 64.46% stake in the company while Himachal Pradesh holds 25.51% interest. The remaining 10.03% share is held by public.

Through the acquisition, the state-run utility aims to meet its goal of reducing fossil fuels generation capacity from current 97% to 70% by 2032, reported Bloomberg.

Currently, SJVN operates two hydro-power plants including 1,500MW Nathpa Jhakri Hydro Power Station in Himachal Pradesh and 412MW Rampur Hydro Power Station also in Himachal Pradesh.

CLSA in a note to The Economic Times said: "We like NTPC’s M&A strategy, which is focused on acquiring existing regulated assets with option value earlier of states and now joint sector, SJVN.”

SJVN, which also operates 47.6MW wind project in the western state of Maharashtra, is planning to build a 900MW hydro-power project in Nepal.

The divestment of stake in SJVN will help in raising funds for the county in order to meet its fiscal deficit, according to Daily News & Analysis.