Ministry prefers public offer to divestment in NTPC

Virtually ending the debate on whether or not divest in power giant National Thermal Power Corp, power ministry will soon approach Cabinet for its approval to increase corporation's equity by 10 per cent by way of issuing fresh equity in the market.

"We will go to Cabinet soon... there was an intense debate whether to acquire fresh 10 per cent equity to generate resources or to divest 10 per cent government stake... finally the consensus emerged on increasing the equity through public issue," power secretary R V Shahi said.

NTPC has a paid-up capital of Rs 8000 crore (Rs 80 billion) and if permitted by the Cabinet the corporation would be hitting the capital for raising up to Rs 800 crore (Rs 8 billion) through initial public offer soon.

Shahi said the acquiring fresh equity would provide more leverage to NTPC for raising fresh debts.

"We are also working out whether the target for NTPC to generate 9,500 mw in the tenth five year plan can be stepped up to 12,000 mw for which they may require additional resources and the IPO will be one of the option," Shahi said.

Earlier, NTPC was contemplating to approach Securities and Exchange Board of India for allowing to enhance its equity by just five per cent instead of stipulated norm of minimum 10 per cent equity.