NTPC gets offer from Malaysia's Petronas for stake in its renewable energy arm

NTPC share price: Malaysia-based petroleum company Petronas offered to buy a 20 per cent stake in PSU power producer NTPC's subsidiary, NTPC Green Energy (NGEL), for Rs 3,795 crore. This marks the first time an Indian PSU company has offered a stake in a renewable energy arm. NTPC Green Energy is the green energy arm of NTPC, India's largest power producer. 

NTPC received an offer price higher than the expected expression of interest – one of the initial transaction documents shared by the buyer with the seller in a potential M&A deal, which was Rs 3,000 crore and 78 per cent above the second-highest bidder. It values the NGEL at $2.3 billion.

According to Zee Business research, Petronas outbid other local firms for the stake with an offer of  Rs 27.5 per share. The second-highest bidder was REC, which offered Rs 15.5 per share, and Indraprastha Gas (IGL) placed a bid of Rs 6.7 per share.

NGEL is also planning to buy a 100 per cent stake in NTPC Renewable Energy. 

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How will NTPC use the proceeds from the sale?

The power generation company plans to use the proceeds from the sale to expand its non-fossil businesses. The company has earmarked investments of more than Rs 2.47 lakh crore in the next 10 years to raise the share of non-fossil energy in its portfolio to 45 per cent from the present 9.41 per cent.

The company has committed to adding 60 gigawatts of renewable energy by 2032 with a total group capacity of 130 gigawatts by that date.

NGEL will drive the parent company's non-fossil businesses.

India has set a goal to become net-zero by 2070 and has committed to having 50% of its installed electric power capacity from non-fossil fuel-based energy by 2030.

The country targets 500 gigawatts of renewable energy generation by 2030. Renewable energy sources including wind, hydro, and biomass, constitute 30% of the country's present installed capacity of 412 gigawatts.

NTPC share price history 

NTPC shares have gained about five per cent in the past one year, a period in which the Nifty50 has largely remained flat. 

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