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The government will disinvest 5% stake in NTPC while it will offload 10% in Satluj Jal Vidyut Nigam Ltd.

The Cabinet Committee on Economic Affairs (CCEA) today approved the disinvestment of government equity in two power companies – National Thermal Power Corporation Ltd (NTPC) and Satluj Jal Vidyut Nigam Ltd (SJVN).

Earlier, the finance ministry indicated divestment in 9-10 companies in the next one year. The government has recently disinvested 5% stake in NHPC and another 10% in Oil India Ltd. It also plans follow-on-public offer of Rural Electrification Corporation’s (REC), which is  likely be held in December this year.

While the Centre will disinvest 5% of its stake in NTPC, it will offload 10% in SJVNL, a joint venture between the government of India and Himachal Pradesh state (75:25).

Following the disinvestment, the government stake in NTPC will come down to 84.50% from its earlier 89.50% stake. And, its stake in SJVN will come down to 65% from its earlier 75%. The paid up equity capital of SJVN is Rs 4,108.81 crore, according to a government statement.

“On disinvestment of the proposed equity, the market capitalisation of NTPC would be higher. It will help the company raise resources in the international market on competitive terms,” said the release.

SJVN, which is engaged in developing hydro-electric power projects in Himachal Pradesh, intends to invest over Rs 23,000 in the next decade. Currently, owns and operates a 1,500-MW Nathpa-Jhakri project at Kinnaur district in Himachal Pradesh.

In September 2009, SJVN in partnership with NHPC Ltd, announced a 1,500-MW hydropower project at Tipaimukh in Manipur. For the plant, the two companies will jointly invest around Rs 9,000 crore. Its revenue was Rs 2,029.24 crore in 2008-09 fiscal against Rs 1,582.21 crore a year before. The net profit was Rs 1,015.32 crore, 33% up from the previous year.