Govt may push for 2 more M&As in energy space to meet FY19 disinvestment target

There are plans to make power generation major NTPC a holding company of the energy sector by acquiring three or more state-run companies

Intent on fulfilling its divestment target before FY19-end, the Finance Ministry wants to push through at least two more merger and acquisition deals among government-owned energy companies, after the recent deal between Power Finance Corporation and REC, reported The Economic Times.

Senior government officials told the paper that there are plans to make power generation major NTPC a holding company of the energy sector by acquiring three or more state-run companies.

First, NTPC will buy the government's 64 percent stake in SJVN, which will raise around Rs 6,500 crore at current valuation. At the same time, NHPC could acquire the North Eastern Electric Power Corporation from the government, an official told the paper.

In the plan's next phase, transmission companies like Power Grid Corporation of India (PGCIL) may be brought in with NHPC to create a big power sector behemoth under NTPC, the official added. Smaller central public sector enterprises (CPSEs) like the Damodar Valley Corporation could also be included in this plan.

"Essentially, NTPC becomes the holding company, with all these entities under its umbrella, but each company will retain management control," the official told the paper.

Of its divestment target of Rs 80,000 crore, the government has only raised Rs 32,997 crore this fiscal. "This is not being done with the sole idea of disinvestment but for creating strong entities that can compete globally," another official said.

Last week, the government received the Cabinet's approval to sell its entire 52.63 percent stake in power sector financing company REC to PFC, which is expected to fetch the Centre Rs 14,000 crore.

Atanu Chakrabarty, Secretary to the Department of Investment and Public Asset Management (Dipam), recently said he is confident the government will meet its target. "Pawan Hans, for which proposals have been invited, has received substantial competitive interest," he had said.

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