PSU public offers may be delayed

The public offers of some government-owned power utilities, which were to be listed in the last fiscal (2006-07), may spill over into the next financial year (2008-09), adversely affecting their expansion.

One of the key reasons for delay is the time being taken in appointing independent directors to the boards of these companies.

While the public offers of the Power Finance Corporation and Power grid corporation are over, hydro-power major National Hydro Power Corporation (NHPC) and the rural electricity financier Rural Electrification Corporation (REC) are yet to receive SEBI approval for their public offers.

"The ongoing process is very slow and issues of these companies can now happen next year only," said a Delhi-based power sector analyst.

While NHPC had filed its offer document with SEBI in April, REC did it in August.

According to a senior official at NHPC, the public issue is being delayed because the government hasn't yet appointed independent directors on its board, which is a pre-requisite for public offer.

"All formalities from our side are done, it is the government that has to appoint directors now," added the official.

The company has huge expansion plans, which includes more than doubling its current capacity of 4,145 Mw to 10,000 Mw by 2012.

This would require an investment of Rs 30,000 crore, a part of which would be financed by the public issue, while the rest would be managed through debt, budgetary support and internal accruals.

Industry experts say that this is the perfect timing for power IPOs to hit the market, since investor sentiments for this sector are very positive at the moment.

While one reason is the good track record of the listed government utilities like NTPC and PFC, and more recently Power Grid Corporation, power is also seen as a fast-growing sector, with generation capacity poised to double in the next 10 years, with concomitant growth in transmission and distribution sectors.

With a huge appetite for quality Indian paper, experts say that the issues in the pipelines would also be lapped up by investors.