NTPC mulls buying $1.3 billion stake in SJVN from government

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NTPC Ltd., India’s biggest electricity producer, is seeking to buy the federal government’s stake in hydro-power producer SJVN Ltd. to boost its share of non-fossil fuel generation capacity, according to people with knowledge of the development.

New Delhi-based NTPC has written to the finance ministry’s Department of Investment and Public Asset Management proposing to buy India’s stake in SJVN, the people said, asking not to be identified as the matter isn’t public. India’s 64.5 per cent share in the hydro-power generator is valued at about 87.2 billion rupees ($1.3 billion), according to Bloomberg calculations.

The purchase will aid state-run NTPC meet its goal of reducing the share of its generation capacity that relies on fossil fuels to 70 per cent by 2032 from about 97 per cent now. It will also help the central government raise funds and narrow its fiscal deficit.

Press officials from NTPC and India’s finance ministry declined to comment. SJVN Chairman R.N. Misra was unable to immediately comment, a company official said.

SJVN shares jumped as much as 6.4 per cent to Rs 34.70, the biggest intraday increase in more than two months. They traded at Rs 32.80 as of 3:14 p.m. in Mumbai on Thursday. NTPC rose 2.2 per cent Rs 164.35.

SJVN, based in the northern Indian city of Shimla, operates two hydro-power plants with a combined capacity of about 1.9 gigawatts, according to the company’s website. The company also operates a 47.6 megawatt wind-power plant in the western state of Maharashtra and plans to build a 900 megawatt hydro-power project in Nepal.

NTPC’s only hydro-power plant has a capacity of 800 megawatts. It has set up 545 megawatts of solar-power projects and is considering building more, including one at a site that was originally planned for a coal-based power station.