Petronas offers to buy 20% stake in NTPC green arm

17 Mar 2023 , 08:18 AM

In the first sale of its sort by a state-run company, Malaysia’s Petronas has offered Rs3,800 crore(460 million) to purchase a 20% share in the green energy division of India’s largest power producer, NTPC.

The offer price was 78% higher than the second-highest bidder and above the 30 billion rupees that NTPC had anticipated when it requested expressions of interest in NTPC Green Energy (NGEL) last year. The NGEL is valued at $2.3 billion.

The transaction, which took place at a time when the country’s renewables industry is drawing more international investment, was the first time a state-run corporation in India offered a stake in a renewable energy subsidiary.

According to figures from India’s commerce ministry, renewable energy is one of the top five industries in the nation for foreign investment this fiscal year, accounting for 5% of all inflows from April to September 2022 compared to 3.3% during the same period last year. 

According to a government official, an industry source, and a banker, who all talked to Times of India, Petronas outbid other local companies for the stake with an offer of Rs27.52 per share. According to the banker, Indraprastha Gas Ltd (IGL) put a bid of Rs6.67 per share, while REC Ltd, the second-highest bidder, offered Rs15.47 rupees per share.

The sale’s revenues will be used by NTPC to grow its non-fossil companies. The corporation plans to invest more than $30 billion over the next ten years to increase the non-fossil energy portion of its portfolio from 9.41% to 45%. By 2032, the corporation plans to increase the entire group capacity to 130 gigawatts by adding 60 gigawatts of renewable energy. 

The non-fossil businesses of the parent corporation will be driven by NGEL. India has pledged to obtain 50% of its installed electric power capacity from non-fossil fuel sources by 2030 and has set a goal of becoming net zero by 2070.

By 2030, the nation wants to generate 500 gigawatts of renewable energy. 30% of the nation’s current installed capacity of 412 gigawatts comes from renewable energy sources like wind, hydro, and biomass.

The Chief of Petronas’ clean energy division earlier last month told Reuters that its primary growth areas are India and Australia, and it anticipates using the additional funding to fulfil its lofty goals.

The federal government must approve the Petronas transaction.

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