NTPC mulls JV with NIIF to set up renewable InvIT; alliance likely for power distribution business too

Public sector utility NTPC is in talks with the government’s strategic investment fund NIIF to set up an infrastructure investment trust (InvIT) as a joint venture. The move will help the company to unlock the value of its renewable energy projects.

The sovereign fund is also expected to be a joint venture partner in the utility’s foray in the power distribution business where NTPC is bidding for the privatisation of union territory discoms.

Sources close to the development told FE that the plan is to put the entire 1GW of operational renewable assets and the 2GW of RE projects in pipeline under the trust. This will help to raise capital for the expansion of renewable capacity. “The company will also form a joint venture with NIIF to participate in the privatisation of discoms business going ahead,” sources added.

NTPC plans to generate 25% of its power capacity from renewable sources by 2030, which will be equivalent of 32GW of power capacity and will require an investment of Rs 1.60 lakh crore. When contacted by FE, NIIF spokesperson said, “As a policy we do not comment on market speculation and information gathered by third party sources.”

The NTPC spokesperson declined to comment. Rupesh Sankhe, vice president at Elara Securities, said, normally companies do invIT for capital expenditure, debt repayment purpose or to provide higher dividend to the shareholders. “Since NTPC’s renewable business does not have a separate balance sheet, an InvIT will help the company to get investors to fund the project.

Many investors now take environment, social and governance (ESG) as a investment criteria, and coal being the largest source of pollution, getting more funds on an ongoing basis would be easy for renewables InVITs,” Sankhe said.

“It will also help the company to insulate its regulated thermal business from the financial risks as their cashflows will be protected,” Sankhe said. At present, there is only one operational InvIT in India run by Sterlite Power — India Grid Trust (IndiGrid). If successful, NTPC will be the second such InvIT.

With a total installed capacity of 62,110 MW,NTPC group has 70 power stations comprising 24 coal-based units, seven combined cycle gas/liquid fuel stations, one hydro, 13 renewables, along with 25 subsidiary and joint venture entities.

NIIF manages over $4.3 billion of equity capital commitments across its three funds —Master Fund, Fund of Funds, and Strategic Opportunities Fund — each with a distinct investment strategy. It is a collaborative investment platform for international and Indian investors, anchored by the government of India, with investments across asset classes such as infrastructure, private equity and other diversified sectors in India.