The power ministry has raised concerns over diluting the government’s stake in NTPC, PFC and PowerGrid to below 51 per cent.
“There are issues. There will be some advantages and there will be some disadvantages,” power secretary S.N. Sahai told reporters at the 19th foundation day of the Bureau of Energy Efficiency (BEE) here on Monday.
The ministry has aired its reservations to the to the finance ministry. The government owns 54.14 per cent in NTPC, 54.96 per cent in PowerGrid and 55.99 per cent in PFC.
Asked whether the power ministry has rejected the proposal, he said, “There is nothing like rejection. Each proposal has two sides, the advantages and disadvantages. We have conveyed both of them to the finance ministry. We have told them about the disadvantages, and we are cognizant of the advantages”.
Sahai said the ministry had highlighted both aspects of the issue and no stand had been taken yet.
Officials said certain foreign bond holders in these PSUs have raised concerns about the dilution of the government’s stake. The PSUs are supposed to compensate bondholders after the reduction of the government stake to below 51 per cent.
They said the power companies have indicated their cost of borrowings was likely to go up if the government reduces its stake.
During fund-raising programmes, the companies had maintained the Centre would holds 51 per cent in each of them, and they would have to pre-pay some of the lenders if the government reduced its stake, the officials said.
The power companies will have to compensate the bondholders after the reduction of the government’s stake to below 51 per cent. The PSUs have raised concerns about this proposal saying it would not go down well with investors, particularly foreign lenders.