Petronas To Purchase 20% Stake worth USD 460M in India's NTPC

As per three sources, Malaysia's Petronas has offered 38 billion rupees ($460 million) to buy a 20% stake in India's largest power producer, NTPC, in the first deal of its kind by a state-run firm.

The offer price was 78% higher than the second-highest bidder and was higher than the 30 billion rupees NTPC had expected when it asked for expressions of interest in NTPC Green Energy (NGEL) last year. It is worth $2.3 billion to the NGEL.

NTPC and Petronas did not respond immediately to requests for comment. The sources declined to be identified because the transaction is still being finalised.

The transaction marked the first time an Indian state-run company offered a stake in a renewable energy arm, and it comes at a time when the country's renewables sector is attracting increasing foreign investment.

Renewables are one of India's top five industries for overseas funds this fiscal year, accounting for 5% of total inflows from April to September 2022, up from 3.3% the previous year, according to data from India's commerce ministry.

Petronas outbid other local firms for the stake, paying 27.52 rupees per share, according to a government official, an industry source, and a banker. REC Ltd, the second-highest bidder, offered 15.47 rupees per share, while Indraprastha Gas Ltd (IGL) bid 6.67 rupees per share.

The proceeds from the sale will be used to expand NTPC's non-fossil businesses. The company has set aside more than $30 billion in investments over the next ten years to increase the share of non-fossil energy in its portfolio from 9.41 percent to 45 percent.

The company has committed to adding 60 gigatonnes of renewable energy capacity by 2032, bringing the total group capacity to 130 gigatonnes by that date.

The parent company's non-fossil businesses will be driven by NGEL.

India has set a goal of becoming net-zero by 2070 and has committed to using non-fossil fuel-based energy for 50% of its installed electric power capacity by 2030.

The country intends to generate 500 gigatonnes of renewable energy by 2030. Renewable energy sources such as wind, hydro, and biomass account for 30% of the country's current installed capacity of 412 gigatonnes.

Earlier this month, the CEO of Petronas' clean energy arm told Reuters that India and Australia are its key growth markets, and that the company plans to raise more capital to meet its ambitious targets.

The Petronas deal must be approved by the federal government.