New Delhi: NHPC Ltd is considering raising about ₹2,000 crore through the securitization of assets in the upcoming financial year, according to two people in the know, as the state-run hydropower major seeks to raise funds for expansion.
India’s largest hydropower company, however, has not yet finalized the assets to be securitized and discussions are on, the people said on the condition of anonymity.
The company didn’t respond to queries on the target for FY26.
However, in response to a query from Mint, an NHPC spokesperson said: “For FY25, it is informed that the company has achieved the monetization target of ₹2,000 crore by securitization of free cash flow (return on equity) of Dulhasti Power Station, UT of Jammu & Kashmir, for next 8 years with total proceeds of ₹2,348.45 crore.”
In FY24, the hydropower major monetized the return on equity of its Kishanganga Power Station in J&K for eight years.
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Securitization entails converting an illiquid asset or a group of assets or their expected future cash flows into investable securities, on which investors are paid interest and principal.
By value, the power sector accounts for 7% of the assets on offer under the Union government’s national monetization pipeline. It includes power generation assets totalling 6 gigawatt (GW) of hydropower and renewable energy assets accounting for ₹39,832 crore, and power transmission assets accounting for as much as ₹45,200 crore.
For NHPC, a ‘Navratna’, that’s to fund the expansion of its hydropower, pumped storage, and solar power projects.
Once the asset for securitization of returns is finalized for the fiscal, NHPC will seek bids from banks and non-banking financial companies. The financial institution offering the lowest discounting rate or the highest amount for securitization would be selected and the project or the asset would be pledged with it. It works as a loan for the company, and NHPC will retain ownership of the project.
India’s monetization pipeline
NHPC’s target of ₹2,000 crore for the upcoming fiscal comes at a time when the government is working on the next phase of the National Monetisation Plan.
While presenting the Union budget 2025, finance minister Nirmala Sitharaman said: “Building on the success of the first Asset Monetization Plan announced in 2021, the second plan for 2025-30 will be launched to plough back capital of ₹10 lakh crore in new projects. Regulatory and fiscal measures will be finetuned to support the plan.”
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NHPC, too, has massive investment plans across hydropower, pumped storage projects (PSP) and other green power projects.
It aims to take its hydropower capacity to 22 GW by FY34, from the current 7.3 GW. The company also would develop around 20 GW of cumulative pump storage capacity, mostly with state government-backed entities. In an interview with Mint in February, NHPC chairman and managing director Raj Kumar Chaudhary had said that it plans to invest around ₹84,000 crore to set up the 20 GW PSP capacity, which would require an overall capex of about ₹1.2 trillion.
NHPC also aims to list its subsidiary NHPC Renewable Energy Ltd by FY27 after scaling its green capacity.
State-run power sector companies have firmed up a mix of models to realize maximum value. These include creating a holding company and then divesting stakes to raise money; initial public offerings (IPOs), cashflow monetization, and setting up infrastructure investment trusts.
