State-owned enterprise NTPC Limited will launch the initial public offering (IPO) of its renewable energy subsidiary, NTPC Renewable Energy, in around two years.
The subsidiary will primarily obtain funds to carry out the company’s plan to create a 60 giga-watt (GW) green capacity by 2032.
NTPC Ltd will likely put in 15-20 per cent of its equity into projects related to renewable energy and other projects will be funded through debt.
As per a source quoted in Financial Express, the company is also willing to keep its stake below 50 per cent in the subsidiary but a call on this will eventually be taken by the central government,
As of now, the company has an installed renewable energy capacity of 1.4 GW. However, it plans to add another 13 GW of green power generation base by 2024.
Meanwhile, the company will benefit from the relatively lower 17 per cent (including surcharge) corporate tax rate in the business of renewable energy as the projects will be established under the NTPC Renewable Energy that was established in October 2020.
The Union Budget 2021 had actually provided new domestic electricity generation firms the concessional corporate tax rate of 15 per cent, which subsequently cut down their tax incidence by around ten percentage points.