The board of Central PSU hydropower company NHPC has approved the formation of two subsidiaries, dedicated for special purposes.
In a recent stock exchange filing, NHPC said that its board has approved the formation of two wholly-owned subsidiaries, subject to requisite approval from the Central government.
The first subsidiary will be engaged in development of renewable energy, small hydropower and green hydrogen projects. The NHPC board also approved an initial investment of Rs.20 crore in this proposed subsidiary.
The second subsidiary will act as an investment vehicle and company for commissioned hydropower projects. In effect, this subsidiary will help in monetization of commissioned assets. NHPC will make an initial equity investment of Rs.5 crore in this new subsidiary.
Though the stock exchange filing did not specify more details, NHPC is likely to float an infrastructure investment trust (InvIT), thereby monetizing commissioned assets. It may be recalled that Power Grid Corporation of India Ltd (PGCIL) also floated an InvIT by which it raised Rs.2,736 crore through the monetization of five operational transmission schemes, so far.
Merger
In an independent development, the NHPC board also initiated the process of merging or amalgamating its wholly-owned subsidiary Jalpower Corporation Ltd with NHPC Ltd. It may be recalled that on January 13, 2021, NHPC signed a definitive agreement, for implementation of the approved resolution plan for takeover of the 120-mw Rangit-IV hydropower project of Jalpower Corporation Ltd (JPCL) in Sikkim. Subsequently, JPCL became a wholly-owned subsidiary of NHPC Ltd. The estimated cost of the Rangit-IV project is around Rs.945 crore.
JPCL is the second company after Lanco Teesta Hydro Power Ltd (LTHPL) to be acquired through NCLT process by NHPC. LTHPL was taken over by NHPC in October 2019. As of March 2021, LTHPL continued to exist as a wholly-owned subsidiary of NHPC Ltd, implying that no merger/amalgamation with NHPC Ltd, has yet taken place.
JPCL was owned by the Jaiprakash (Jaypee) Group while LTHPL belonged to the Hyderabad-based Lanco Group.
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The overall plan
According to an analysis by T&D India, it appears that NHPC has the following plan of action. All operational hydropower projects, with an estimated aggregate installed capacity of around 7 GW currently, will be housed under a new subsidiary, as discussed above. This will set the process of formation of an InvIT and subsequent asset monetization.
All activities, other than the core business of large hydropower, will be housed into a new subsidiary. Such activities will include small hydropower, renewable energy like solar and wind, green hydrogen, etc. A “small” hydropower project is one with installed capacity up to 25 mw.
NHPC also has joint ventures with other government entities. These JVs will continue to exist till such time that NHPC does not make them wholly-owned subsidiaries. As of March 31, 2021, NHPC’s joint ventures included NHDC Ltd (NHPC’s equity holding 51.08 per cent), Loktak Downstream Hydroelectric Corporation Ltd (74.92 per cent), Bundelkhand Saur Urja Ltd (74 per cent) and Chenab Valley Power Projects Pvt Ltd (51.9 per cent).
Featured photograph (source: NHPC) shows the Central PSU’s Chamera-I hydropower project in Himachal Pradesh.
