Finance ministry considers NTPC divestment
New Delhi: The Indian finance ministry recently mooted divesting the government equity in the wholly owned National Thermal Power Corporation (NTPC). This is to help bridge the fiscal deficit. The proposal is in response to a recent Cabinet note proposed by the power ministry, which had sought issuance of 5-per cent fresh equity in the company through the initial public offering (IPO) route.

The finance ministry turned down the proposal for fresh equity on the grounds that NTPC is an "under-leveraged" company with room to raise additional debt to finance projects. In the case of a public offer for fresh equity, money accrues to the company, while in the case of divestment or a public offering of the existing equity, funds accrue to the government, say reports. The power ministry had mooted the fresh equity-based public offer proposal to fund NTPC's generation capacity expansion programme. During the Tenth Plan Period (2002-03 to 2006-07) when NTPC plans to set up 9,370 MW plant, the company is facing a resource shortfall of around Rs 5,300 crore. In this context, the company mooted the proposal to bring in fresh capital in the domestic as well as overseas markets to raise resources.
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