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State Generating Units are Trying to Rope in NTPC for Future Funding

News

The Maharashtra government plans to offer equity to NTPC Limited (formerly National Thermal Power Corporation) in its power generation company MahaGenco. A formal move to offload equity ranging between five per cent and 25 per cent will be taken after a Cabinet decision and a rating analysis done by CARE, and finalisation of financial restructuring plan by MahaGenco.

Source: Business Standard

SNP Insight

After Rajasthan now Maharashtra is planning to off load equity between 5%-25% to NTPC. Utilities are finding it tough to get funding from banks which are already feeling the pressure of 1.5 lakh loan to power sector at risk of turning NPA. So, for debt restructuring and funding for ongoing & future projects these company are looking for a partner who has strong financial strength. NTPC as a highly efficient public sector power company best suited for these state utilities to go forward with the transformation. So, it may encourage other cash strapped state power utilities to strike a similar deal with NTPC in coming days.      

Source: SNP Infra Research