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After a Withdrawn Deal, NTPC Considers Other Offers for Green Unit

NTPC Ltd., the state-run power company, is contemplating seeking new bids for a stake in its green energy division, following the withdrawal of the top bidder. This occurrence highlights the difficulties the country faces in rapidly developing its renewable energy industry to meet climate objectives. Petroliam Nasional Bhd., a Malaysian oil major, made the highest offer of nearly 41.3 billion Rs. for a 20% stake in NTPC Green Energy Ltd., as per sources familiar with the matter. However, Petronas later withdrew the bid, citing that the stake was too small to provide it with a board seat in the unit, said the sources, requesting anonymity as the talks are private. The bid by Petronas would have valued NTPC Green Energy at around 206.5 billion rupees.

The challenges facing India’s largest power generator in finding an investor shine a focus on the problems that have delayed India’s ambitions to expand its renewable energy sector. To support indigenous manufacturing, Prime Minister Narendra Modi has erected trade hurdles that are impeding the growth of renewable energy projects and driving up costs. Additionally, rising interest rates have increased the cost of capital.

In addition, rising clean energy demand and alluring subsidies in developed countries like the US and the EU are driving some investors away from India.

Climate Objectives

According to federal Power Secretary Alok Kumar, India is seeking to increase the proportion of clean sources in the country’s power-generation capacity to 90% by 2047, which is more than double the current level.

NTPC’s tender offer last year drew initial interest from 13 companies, including Brookfield Asset Management Inc., Canada Pension Plan Investment Board and Abu Dhabi National Energy Co. Of these, only three companies — Petronas, Indian power lender REC Ltd. and gas retailer Indraprastha Gas Ltd. — put in final bids.

An email seeking a response from REC and Indraprastha Gas spokespersons was unanswered.

The fiscal year that concluded in March was anticipated to mark a critical turning point for NTPC Green, the nation’s largest coal customer and the face of the transformation. The business has decided to enlist a well-known investor and follow it up with an IPO this year. Both of those proposals failed to materialize.

With planned investments in green hydrogen, electric vehicle charging infrastructure, and renewable energy parks, NTPC is quickly becoming one of the nation’s leading energy transformation champions. Nearly 90% of the 72 gigawatts of generation capacity used by the New Delhi-based firm still runs on fossil fuels. By 2032, it intends to increase capacity to 130 gigawatts, with sustainable energy accounting for over half of that goal.

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Source: The Economic Times

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