Three sources told Reuters that Malaysia’s Petronas has made an offer of 38 billion rupees ($460 million) to buy a 20% stake in the green energy arm of India’s largest power producer, NTPC. This is the first time a state-run company has made a deal like this.
The offer price was more than the 30 billion rupees that NTPC had been hoping for when it asked for interest in NTPC Green Energy (NGEL) last year. It was also 78% more than what the second-highest bidder had offered. It gives a value of $2.3 billion to the NGEL.
When asked for comments, NTPC and Petronas did not respond right away. The sources wouldn’t say who they were because the deal is still being worked out.
The deal was the first time an Indian state-run company sold a stake in a renewable energy arm. It also comes at a time when India’s renewable energy sector is getting more and more investment from abroad.
Renewables are one of India’s top five industries for getting money from abroad this fiscal year. From April to September 2022, renewables got 5% of all money that came into the country, up from 3.3% in the same time period last year.
One government official, an industry source, and a banker all said that Petronas’ offer of 27.52 rupees per share was higher than those of other local companies. The second-highest bidder, REC Ltd, offered 15.47 rupees per share, and the third-highest bidder, Indraprastha Gas Ltd (IGL), bid 6.67 rupees per share, according to the banker.
REC and IGL were also not able to comment right away.
NTPC plans to use the money from the sale to grow its businesses that don’t depend on fossil fuels. In the next 10 years, the company plans to invest more than $30 billion to increase the amount of non-fossil energy in its portfolio from 9.41% to 45%.
The company has promised to add 60 gigawatts of renewable energy by 2032. By that time, the group’s total capacity will be 130 gigawatts.
NGEL will run the non-fossil businesses of the parent company.
India wants to be carbon neutral by 2070, and it has promised to get 50% of its electricity from sources other than fossil fuels by 2030.
The country wants to get 500 gigawatts of energy from renewable sources by 2030. 30% of the country’s installed capacity of 412 gigawatts comes from renewable energy sources like wind, water, and biomass.
The CEO of Petronas’s clean energy arm told Reuters earlier this month that India and Australia are its most important growth markets and that the company plans to get more funding to reach its ambitious goals.
The deal between Petronas and the federal government needs to be approved.
Source: Team CurrencyVeda