Cabinet takes steps to grow India’s green economy

Currently, ‘Maharatnas’ such as NTPC can make equity investments to undertake financial joint ventures and form wholly-owned subsidiaries. They can also undertake mergers and acquisitions in India and abroad, subject to a ceiling of 15% of the net worth of the state-owned company, limited to ₹5,000 crore in one project.

NTPC Green Energy Ltd was incorporated on 7 April 2022 as a wholly-owned subsidiary of NTPC. After the cabinet approval, NTPC will be able to raise its investment in the company.

The move would help achieve a target of 60 GW renewable energy (RE) capacity by NTPC Ltd, an official statement on Friday said. Further, the CCEA also exempted NGEL’s investment in NTPC Renewable Energy Ltd (NREL) and its other joint ventures or subsidiaries subject to a ceiling of 15% of its net worth beyond the monetary ceiling of ₹5,000 crore to ₹7,500 crore.

In line with its global climate commitments, India is working toward a low carbon emission NTPC through this investment in renewable energy. Its green energy arm NGEL aims to be the flag bearer of NTPC’s renewable energy ambitions. It has 15 renewable energy assets of 2,861 MW which are operational or nearing commercial operation date and through its subsidiary NREL is set to expand its renewable energy portfolio by participating in competitive bidding and multiple emerging opportunities in the green energy business.

“The exemption given to NTPC will aid in improving India’s global image as a green economy,” the statement said.

In another boost to the renewable energy sector, the CCEA approved the listing of the IREDA through the initial public offering (IPO) route. Through the IPO, the Centre will partly sell its stake in the company.

The decision has been necessitated by a change in the capital structure following an infusion of ₹1,500 crore in capital by the government in March 2022.

Further, the exemption to NTPC will also help decrease India’s dependence on conventional sources of energy by diversifying India’s energy generation and will also decrease the country’s coal import bills. It will also help to ensure 24*7 power supply to each and every corner of the country, the statement said. The renewable energy project will also generate direct and indirect employment opportunities to the local people at construction stage as well as during O&M stage. The development also comes at a time, when NTPC has been looking to sell its stake in its green energy subsidiary.

Another statement said that the latest move to list shares of the renewable energy-focused financing company supersedes earlier CCEA decision taken in June 2017 for allowing IREDA to issue 13.90 crore fresh equity shares of ₹10 each to the public on book building basis through IPO.

“The Initial Public Offer (IPO) will help in unlocking the value of Government’s investment on one hand and on the other hand will provide an opportunity to the public to acquire stake in the national asset and draw benefits therefrom. Besides, it will help IREDA in raising a part of its capital requirement for meeting growth plans without depending on the public exchequer, and improve governance through greater market discipline and transparency arising from listing requirements and disclosures,” it said.

IREDA is currently a wholly owned government of India, Mini-ratna (Category-I) CPSE incorporated in 1987 and finances renewable energy (RE) and energy efficiency (EE) projects in India.