MUMBAI, Nov 11: In a far-reaching move, the Orissa government has invited equity participation in Orissa Power Generation Corporation (OPGC) from both domestic and foreign private companies. This is the first time an Indian state has invited private participation in its own power generation unit.

DSP Merill Lynch, the lead manager to the disinvestment has invited bids on behalf of OPGC and Orissa government, for acquisition of 26 per cent equity capital in OPGC. The offerer will have the right of "first refusal" on any subsequent disinvestment, says a statement by DSP Merrill Lynch.

The disinvestment would be through a combination of fresh issue of equity by OPGC (8 per cent of the enhanced equity capital) and sale of shares by the Government of Orissa (18 per cent of the enhanced equity capital).

The successful bidder would be entitled to nominate proportionate members on the board of OPGC including the Director (Operations) who would be responsible for day-to-day plant operations. 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. The statement says that all significant decisions regarding change in board structure, execution of material contracts, key financial transactions, changes in business of the company would be taken with the consent of the strategic investor.

At present, the Rs 459 crores equity capital of OPGC is wholly owned by the Government of Orissa. OPGC has a 420 MW coal fired thermal power plant at IB Valley in Orissa.

OPGC has already signed a 30 year power purchase agreement with Grid Corporation of Orissa for the entire power generated. The corporation is also planing to expand its capacity by 420 MW. Infrastructure facilities for the expansion have been put in place along with first two units.

The statement says that the bidding companies must have a power generation capacity of at least 200 MW or net worth of over Rs 300 crore or disposable funds under management in excess of Rs 300 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.