Government allows NTPC to invest more than 30% of its net worth in its green branch

The government allowed NTPC to invest in its subsidiary, NTPC Green Energy (NGEL), beyond the limit allowed for a “maharatna” central public sector enterprise (CPSE).

Existing guidelines prescribe a cap of 30% of a CPSE’s net worth to make such investments.

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, also exempted NGEL’s investment in NTPC Renewable Energy and its other joint ventures and subsidiaries, subject to a cap of 15% of its net worth at beyond the monetary cap of ₹50 billion (~$605 million) to ₹75 billion (~$1 billion).

NTPC has set a target to achieve operational renewable energy capacity of 12 GW by 2025 and 60 GW by 2032.

The exemption will help reduce India’s dependence on conventional energy sources by diversifying the country’s energy generation sources and reducing coal import bills. In addition, it will also help ensure 24/7 power supply to all corners of the country.

The exemption will accelerate India’s efforts to reach the target of 500 GW of non-fossil power capacity by the end of the current decade.

Investments by NTPC and its subsidiaries align with the government’s “Panchamrit” program which was announced at the COP26 summit as part of India’s contribution to climate action.

NTPC Green Energy has 15 renewable energy assets of 2,861 MW, which are operational or approaching the date of commercial operation.

NTPC incorporated its green power arm in April 2022 to support its green goals and signed a business transfer agreement with the latter to transfer its 15 solar and wind assets.

The projects have a combined capacity of 2.8 GW. Of the 15 renewable projects, 13 projects with a capacity of 2.2 GW are fully operational, and the remaining two projects totaling 600 MW have reached an operational capacity of 350 MW.

The net worth of the 15 renewable energy assets is ₹13.7 billion (~$171.8 million) as of March 31, 2022, which is 1% of NTPC’s net worth or ₹1.4 trillion. ₹ (~$17 billion).

Last month, NGEL invited banks to offer a green term loan of up to ₹90 billion (~$1 billion) to repay debts to NTPC against the acquisition of 15 revolving assets.

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