The proposed sale of an 11.

36% stake in state-owned NHPC Ltd seems to have got stuck as the stock has slumped and the company seems unable to find a permanent chief executive, threatening the governments Rs.40,000 crore asset sale target for the year. Indias power ministry has asked the department of disinvestment (DoD) to defer the offer for sale (OFS) that was pegged to raise Rs.2,400 crore. While mandatory clearance by the Central Vigilance Commission (CVC) is long awaited for the chairman and managing directors (CMD) position, the director, finance, A.B.L. Srivastava, is involved in a battle with the power ministry in the Delhi high court. According to a 19 June office memorandum to DoD reviewed by Mint, the power ministry has said that economic conditions, market conditions, investor sentiment and other variables are not conducive to the sale, with the BSE power index having depreciated 43% between 1 April 2010 and 30 April 2013. NHPCs shares have dropped 33% in that time to Rs.20.45 from Rs.30. NHPC, formerly the National Hydroelectric Power Corp., has a generation capacity of 5,295 megawatts (MW). It had earlier set itself a target of becoming a 10,000MW utility by 2010. NHPC had targeted a capacity addition of 4,292MW by March at the time of its public offering in 2009. The office memorandum added that the post of chairman and managing director had been vacant since January 2011 and any appointment would take time. In addition, the incumbent to the post of director (finance), NHPC Ltd, is also continuing on the basis of orders issued by the Honourable High Court of Delhi. The matter is still sub judice. A decision regarding filing up the post of director (finance), NHPC Ltd, by a regular incumbent is also likely to take time, it said. As a result of these uncertainties regarding the incumbents of the aforesaid two posts which are very crucial for processing the matter of disinvestment, the present time does not appear conducive for such disinvestment in NHPC Ltd, the memorandum went on to add. The plan was to dilute the governments stake of 86.36%. Shares of NHPC remained at Rs.19 on BSE on Friday. The benchmark Sensex rose 0.44% to 19,495.82 points. While Srivastava declined to comment, a senior power ministry official, requesting anonymity, confirmed the request for deferment and said, We have communicated our view to DoD. It is for them to take a call. A message left for Alok Tandon, joint secretary in DoD involved in NHPCs OFS, with his assistant on Wednesday remained unanswered until press time.

Mint reported on 6 May that a majority of NHPCs hydropower projects that are under construction have been delayed, hampering the governments bid to increase power generation in order to meet demand and boost economic growth. These projects, with a total capacity of at least 3,808.5MW nearly enough to cater to the demands of a user base as large as Delhihave been inordinately delayed due to issues such as disputes between states, geological surprises and resistance from the local population. To be sure, executing a hydropower project is a time-consuming and tedious process. It includes a thorough survey and investigation, detailed project report preparation, relocation and resettlement of the affected population, and infrastructure development. On an average, it takes around five years to execute a hydropower project after it is cleared for construction. There is a long list of reasons why NHPC has been missing its capacity addition targets, not completing projects in time and within budget, said Debasish Mishra, a senior director at Deloitte
Touche Tohmatsu India Pvt. Ltd, an audit and consultancy firm.

One tends to imagine that, if they had indeed achieved their targets, it would have given NHPC the management bandwidth and financial muscle to venture out and develop hydro projects in other developing countries in South-East Asia and Africa, he said. While the government has a disinvestment target of Rs.40,000 crore for the current fiscal, finance ministerP. Chidambaram has maintained that both tax revenue and disinvestment targets will be comfortably met and the government will improve its fiscal deficit projection of 4.8% of gross domestic product in the current fiscal. India has an installed power generation capacity of 2,25,133.10MW of which 17.6%, or 39,623.4MW, is hydropower.