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State Utilities Banking on Sell of Assets to NTPC to Generate Revenue for Financial Restructuring

News

The Rajasthan government has offered to sell its power projects to state-owned NTPC Ltd in an attempt to reduce debt.

Source: live mint

SNP Insight

This will open new path for states to off load their stranded generating capacity to NTPC. And get required cash inflow for outstanding debt of these utilities. And also it may reduce NTPC’s cash spending on future capacity adding projects. This may help to improve the performance of these plants as NTPC has large consumer base to sell the power of these plants.  Also the cash inflow from asset sell will reduce the debt on the state utilities and may help them to spend more on power procurement and system strengthening for AT&C loss reduction.

Source: SNP Infra Research