Government Allows NTPC to Invest Over 30% of Net Worth in its Green Arm

The exemption will help in achieving its renewable energy targets


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

The extant guidelines prescribe a ceiling of 30% of a CPSE’s net worth for making 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 ceiling of 15% of its net worth beyond the monetary ceiling of ₹50 billion (~$605 million) to ₹75 billion (~$1 billion).

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

The exemption will help decrease India’s dependency on conventional sources of energy by diversifying the country’s energy generation sources and decreasing the coal import bills. Further, it will also help ensure a 24X7 power supply to every corner of the country.

The exemption will accelerate India’s efforts in achieving the goal of 500 GW of non-fossil energy capacity by the end of the current decade.

The investments by NTPC and its subsidiaries align with the government’s ‘Panchamrit’ program that 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 nearing commercial operation date.

NTPC incorporated its green energy arm in April 2022 to support its green targets and inked 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 2.2 GW capacity are fully operational, and the remaining two projects totaling 600 MW have attained 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 the net worth of NTPC, i.e., ₹1.4 trillion (~$17 billion).

Last month, NGEL invited proposals from banks for a green term loan of up to ₹90 billion (~$1 billion) to repay debt obligations towards NTPC against the acquisition of 15 renewable assets.