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|November 19, 1999||
NTPC-NHPC deal not intended to bridge fiscal deficit, says govt
Power Minister P R Kumaramangalam said today that the proposal to sell off government holding of National Hydroelectric Power Corporation to another public sector company, National Thermal Power Corporation, was intended to restructure and strengthen the power sector in the country.
Addressing the Economic Editors' Conference in New Delhi, Kumaramangalam said the issue was at a preliminary stage and needed wide discussions among all concerned before it was placed before the Union Cabinet.
He said it was not a proposal from the government side: it came from NTPC. He said the corporation about a year ago appointed ICICI Limited as a consultant for this purpose. ICICI suggested this step as one of the ways to strengthing the power section.
Defending the government's intention to unload its holding in NHPC, he said NTPC accumulated huge cash reserves despite outstanding dues from state governments, public sector units and other power utilities. It had also drawn up an expansion plan for setting up a number of hydel power projects in the country, which would enhance its technical expertise.
Admitting that the fund so raised by the power ministry from NTPC would go the Consolidated Fund of India, he said it would not help the present government in bridging its fiscal deficit gap.
By disinvesting the entire holding of NHPC into NTPC, the government will get Rs 45 billion of which Rs 25 billion will go into the Consolidated Fund this year and the balance will be placed before the Consolidated Fund in the second year, he added.
Kumaramangalam said the policy on hydro power development has recognised the need to improve the hydel share by exploring the vast hydro potential at a faster pace. The objectives of the policy will be achieved by timely completion of the ongoing projects, taking up of new hydroelectric projects, starting survey and investigation of the new green sites, and preparation of a detailed project report.
He said the current level of budgetary support for the hydel sector at Rs 16.54 billion would just be adequate to fund the ongoing projects.
The government, in order to fulfil its commitment to support more hydel power projects, increased the budgetary support to the hydel sector from Rs 8.64 billion at the budgetary expenditure stage to Rs 14.79 billion in 1997-98.
He said the government intended to take advance action for the development of the new hydroelectric projects to correct the adverse hydel share and to minimise the peaking deficit in future.
He said the government on its own cannot support much allocation unless the power sector contributeed to the massive effort required.
In order to finance the new projects in the central sector which will result in a capacity addition of 9,770 mega-watts, it will be necessary to fund additional amount of Rs 600 billion on a 50:50 debt:equity ratio. This would imply budgetary support of about Rs 40 billion to Rs 50 billion per annum for a period of six to seven years.
He said that in view of the limited capacity of the government to give such budgetary support, it was necessary to mobilise additional resources through the corporation. The internal resource generation capacity of NHPC will be negative till 2003-2004 on account of large number of ongoing projects and overdues from the state electricity boards, he added.
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