DVC plans to tap capital market

Kolkata: The Union Minister of State for Power, Mr Jairam Ramesh, that the Damodar Valley Corporation (DVC) is planning to tap the capital market either through a special purpose vehicle (SPV) or a wholly owned subsidiary.

Mr Jairam Ramesh said that the statutory organisation, which itself is not eligible to reap the benefits of the capital market, has appointed KPMG to recommend the measures to restructure the organisation. “The restructuring is expected in end-2008,” the Minister added.

DVC entered into a “handholding relationship till IPO” with KPMG in January this year. KPMG will be responsible for recommending ways and means for restructuring, thereby facilitating compliance of all legal formalities for the same, and finally determine the issue size, timing and other details pertinent to the IPO.

Elaborating on the issue, the Chairman of DVC, Mr Asim Burman, said: “The KPMG recommendations on creation of a new structure without requiring any amendment to the existing DVC Act are expected to be tabled in end-May, following which we will seek the board’s approval for the requisite restructuring.”

On the possible timing of filing the IPO papers, he said that once the board approved the proposals the company would seek final approval from the Centre for the IPO. “Ideally, we should take four months from securing the Centre’s approval for hitting the capital market,” Mr Burman added.

On whether the proposed corporate entity would host all the new power projects of DVC, Mr Burman said that such modalities would be firmed up once the KPMG report was available.

Mr Ramesh expressed concern over direct import of power equipment to take place in the country during the Eleventh Plan period. Out of a total projected 78,000 MW capacity addition during the Plan period, 16,000 MW will be generated based on imported Chinese power equipment.

“I am concerned at the high rate of direct imports of critical equipment. We should try to reverse the trend during the next Plan period,” he added.