NEW DELHI - The Indian government is considering selling state-owned NTPC Ltd's two hydro power firms to NHPC Ltd to create a single hydro power company that would improve efficiency and cut costs, power minister R K Singh told Reuters.

One large hydro power company would help meet high demand at night when solar projects do not run, he said. Solar power projects meet nearly a-fifth of India's peak-hour energy demand during the day.

"We have a number of hydro PSUs (Public Sector Undertakings). We are thinking whether these hydro companies can come together as a hydro large PSU. Then it becomes a specialised hydro company," Power and Renewable Energy Minister Singh said in an interview on Monday.

NTPC, the country's largest power producer, acquired the two hydro companies -- THDC India Ltd (THDCIL) and NEEPCO -- three years ago for about $1.34 billion under a consolidation plan by the Indian government.

The power ministry's proposal to create a single company is aimed at better management and expertise, besides reducing costs and managing related challenges.

Hydropower plants in India take decades to come on stream as they face opposition from environment and religious groups.

Hydro power's share of India's energy has fallen to 11% from 49% 15 years ago due in part to protests by different groups and land clearances.

The combined entity after the merger of THDCIL and NEEPCO with NHPC would have 20 GW of hydro assets. NHPC, which is also state-owned, currently has 12 GW of hydro assets.

The minister did not give details of other companies that could be merged into NHPC.

"NTPC is more of a company which is into thermal and is going rapidly into green energy. They have very limited hydro assets," Singh said.

Solar and wind power plants are intermittent and need support from thermal, nuclear or hydropower plants.

($1 = 82.3050 Indian rupees)

(Reporting by Sarita Chaganti Singh; Editing by Susan Fenton)