Satluj Jal IPO On Track (04-Mar-2010)
The government seems to be on its guard for the IPO of Satluj Jal Vidyut Nigam Ltd, after the response to NHPC IPO.
But, however, this time, the UPA government in centre faced another problem from the state government.
Last month's market uncertainty and the moderate response to NTPC and REC's follow on issue had taken its toll on the IPO of Satluj Jal Vidyut Nigam.
This has led to its postponement. However, the Satluj Jal Vidyut Nigam IPO is the company that runs a 1500 mw hydropower project in Himachal Pradesh.
But the IPO proposal lead to a standoff between the government at the centre and the BJP-led state government over the latter's stake in the company post the IPO.
Both the parties seem to have reached a cordial solution for now.
H K Sharma, CMD of Satluj Jal Vidyut Nigam Ltd stated that earlier the Himachal government wanted to raise their stake to 30% by infusing some equity, but the issue is resolved now.
Meanwhile, the state government seems to have bargained well although the HP government did not get to raise its stake to 30% from its current 25% stake in the company.
The state government will raise its stake to 30% in 412 MW Rampur Hydro project and 1% of the power produced from the present 1500 MW will be allotted free of cost to the Himachal government.
On the other hand, they will also be given priority in another 1200 MW power project that is being set up in the state.
Moreover, not to forget the development and employment opportunities that these power projects will create in the state.
Earlier, it was said that after seeing an unfavourable market response to the Follow-on Public Offering (FPO) of NTPC and REC, the Initial Public Offering (IPO) of Satluj Jal Vidyut Nigam Ltd. (SJVNL) has been put on hold by the Government of India.
Mr. H K Sharma, CMD of SJVNL said its IPO is slightly delayed on the grounds of the outcome to REC and NTPC, as the market is not favorable and the IPO could come in the first half of the next financial year.
SJVNL is a Joint Venture (JV) between the Centre Government and the Government of Himachal Pradesh, where the Centre holds 75 % stake in the company and the rest of the stake lies with the state government.
For this IPO, the government is disinvesting 7.5 % stake in the company and is expecting to raise around Rs. 1,200 crore from the stake sale.
The Board of the company has also cleared the Draft Red Herring Prospectus (DRHP) for the IPO.
In October 2009, the Cabinet Committee on Economic Affairs had approved disinvestment of 10 % in SJVNL.
Whereas, the FPO's of NTPC and REC were subscribed 1.2 and 3.12 times, respectively.
The SJVN Ltd (formerly Nathpa Jhakri Power Corporation Limited - NJPC) was incorporated on 24th May1988 as a joint venture of the Government of India (GOI) and the Government of Himachal Pradesh to plan, investigate, organize, execute, operate and maintain Hydro-electric power projects. The present authorized share capital of SJVN is Rs. 4500 crores.
The Nathpa Jhakri Hydro - Electric Power Station- NJHPS (1500 Mw) was the first project undertaken by SJVN for execution. In addition to the financial assistance from the World Bank, SJVN has also been financed as loan by a Consortium of European Banks, the Power Finance Corporation (PFC) and various domestic commercial banks.
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