June 11 (Bloomberg) -- The Indian government will “soon” appoint an independent director to the board of NHPC Ltd., paving the way for the country’s largest hydroelectric generator to sell shares by September, the power secretary said.

“The government has finalized the name of an independent director who will be appointed soon,” H.S. Brahma said in a brief interview at the ministry in New Delhi today. “The company is readying for the initial public offer by September.”

Securities and Exchange Board of India’s rules require independent directors to make up half the company’s board before it can sell shares, NHPC spokesman Jatinder Maggo said by telephone in New Delhi. The state-owned company has six and needs one more independent director, he said today.

NHPC, formerly National Hydroelectric Power Corp., said in November it had postponed a planned share sale after global equity markets crashed. Prime Minister Manmohan Singh wants to revive stake sales in state-owned companies as stocks rebound after his Congress party-led alliance scored the biggest election win in two decades.

India’s 30-share benchmark Sensitive Index fell 53 percent last year, postponing share-sale plans of companies including NHPC, Oil India Ltd. and Bharat Oman Refineries Ltd. The measure has surged 60 percent in 2009 compared with a 7.4 percent gain in the 1,655-member MSCI World Index.

NHPC is “ready” and is waiting for the government’s approval for the proposed share sale, A.B.L. Srivastava, NHPC’s finance director, said on June 5.

Double Capacity

The producer of electricity from water plans to spend 280 billion rupees ($6 billion) to more than double generating capacity by 2012, Chairman S.K. Garg said in April 2008. Of this, 110 billion rupees would have come from its own cash and the initial offering and 170 billion rupees from borrowings.

The power producer plans to offer 1.68 billion shares, consisting of 1.12 billion new shares and 559.1 million shares owned by the Indian government, according to the share-sale document submitted to the Securities & Exchange Board in August and posted on the Web site. The proceeds will be used to partly pay for the construction of seven hydropower plants.

The stake of the government, which fully owns NHPC, will decline to 86.4 percent after the issue.

The Securities & Exchange Board’s approval for the proposed share sale expires in mid September, NHPC’s Maggo said.

NHPC expects to add 5,322 megawatts of generating capacity by 2012. The power producer has an installed capacity of 5,175 megawatts, according to its Web site.

India plans to add 13,000 megawatts of new capacity every year, President Pratibha Patil said in Parliament on June 4. The country needs more power capacity to cut peak hour shortages that may rise to 12.6 percent, according to a report on the Web site of the Central Electricity Authority.