Finance ministry rejects NTPC`s FPO

In a setback to NTPC, India's largest power producer, the government
has turned down the public sector company's proposal to raise nearly
Rs 6,000 crore through a follow-on public offering (FPO).


"There was a proposal by NTPC to approach the capital market but the
finance ministry rejected it last week," Minister of State for Power
Jairam Ramesh told reporters on the sidelines of a conference on
energy.

The power ministry had approached the department of disinvestment in
August 2007 for approval for NTPC's FPO, which could fetch the company
nearly Rs 6,000 crore to part-finance its expansion programme.

After the FPO, the government's shareholding in NTPC would have come
down to 84.75 per cent from the present level of 89.5 per cent.

The power company has set an ambitious target to double its capacity
to more than 50,000 Mw by 2012 from 27,904 Mw currently, for which it
plans an investment of Rs 88,000 crore.

The company also plans to venture into nuclear power manufacturing and
power generation in the hydro sector.

In 2004, NTPC had raised Rs 5,386 crore through an initial public
offering (IPO) by way of fresh capital and also diluting the
government's stake.

Meanwhile, the company is now looking to borrow over Rs 105,000 crore
from domestic and overseas markets over the next four or five years to
meet its ambitious target of adding 22,430 Mw by 2012.

"Of the Rs 160,732 crore fund requirement during the 11th Plan, Rs
55,224 crore will come from internal resources and the rest will be
borrowed," a company official said.

Domestic borrowings are being pegged at Rs 45,199 crore while External
Commercial Borrowings (ECBs) are being tentatively pegged at Rs 60,309
crore.

NTPC owns 15 coal-based and seven gas/liquid fuel plants with a total
capacity of 27,350 Mw. It also has four joint venture plants with a
capacity of 2044 Mw.