MUMBAI, Dec 23: The Orissa government has decided to adopt a radical stance in privatising power by increasing the level of disinvestment proposed in the Orissa Power Generation Corporation Ltd (OPGC) from 26 per cent to 49 per cent.

It has invited offers from private parties for the acquisition of 49 per cent in the Corporation. Since the successful bidder will have the right to first refusal of any further shares put up for disinvestment by the Orissa government at a later date, this is effectively the first major effort by a state government to privatise power generation. Orissa Power Generation Corporation has 420 MW of coal-based power generation capacity.

The disinvestment will be done through a fresh issue of equity by the corporation (eight per cent of the enhanced equity capital) and sale of shares by the government of Orissa (41 per cent of the enhanced equity capital).

The company is inviting bids for the acquisition of 49 per cent equity, sources said. This supersedes the earlier effort in November calling for offers to purchase 26 per cent of the equity.

After the acquisition process is complete, the Orissa Government and the successful bidder will have equal representation on the board. While the right to appoint a non-executive chairman and the director (finance) will be vested with the Orissa Government, the managing director and functional directors will be appointed by the successful bidder.

The directors nominated by the successful bidder will also participate in the key management sub-committees of the board, that may be appointed from time to time, sources said.

The consent of the strategic investor will be sought before making any significant changes in the board structure, execution of material contracts, key financial transactions and changes in the business of the company, sources added.

Offers will be invited from domestic or foreign companies or investment funds either singly or in consortium. The bidders should have a net worth in excess of Rs 300 crore, excluding revaluation reserves, or funds under management in excess of Rs 300 crore, or power generation capacity of at least 200 mw.

The empowered committee of the Orissa government will shortlist prequalified bidders, who will be given an opportunity for detailed due diligence and review of the draft shareholders' agreement. The shortlisted bidders will then be asked to submit their final and binding bids, sources said. The last date for requesting bid documents is January 10, 1998.

Orissa Power Generation Corporation is a wholly-owned company of the Orissa government having an equity capital base of Rs 459 crore. The company has a 420 MW (two units of 210 MW each) coal-fired thermal power plant located at Ib valley in Orissa. The two units were commissioned in 1994 and 1996 respectively at a project cost of Rs 1,135 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.