State-run hydropower company NHPC Ltd is set to raise approximately ₹2,300 crore this financial year, surpassing its original target of ₹2,000 crore. This fundraising effort is part of the Union government’s monetisation drive and aims to fuel NHPC’s ambitious expansion plans.
NHPC plans to raise the capital by securitising the return on equity (ROE) of its Dulhasti Power Station in Jammu and Kashmir for a period of eight years. According to sources familiar with the matter, while the project’s future earnings will be monetised, NHPC will maintain full ownership and control over the asset.
Securitisation, in this context, refers to converting the future cash flows of an asset into investable securities, which are then sold to investors. This allows the company to generate immediate capital, which will be used for further expansion. Investors in these securities will receive interest and principal repayments based on the project’s revenue. This move is significant as the power sector represents 7% of the total value of assets under the Union government’s national monetisation pipeline.
NHPC has invited bids from banks and non-banking financial companies (NBFCs) for its securitisation plan. The institution offering the best terms—either the lowest discount rate or the highest securitisation amount—will be selected, and the Dulhasti Power Station will be pledged as part of the agreement. The expected discount rate is around 7.9%, which is considered favorable, allowing NHPC to raise funds efficiently while retaining full ownership of the asset.
This financial strategy mirrors NHPC’s previous efforts in FY24, where the company successfully raised ₹2,046.94 crore by monetising the return on equity from its Kishanganga Power Station. NHPC’s monetisation plans have been expedited due to the company’s need for liquidity, with the securitisation expected to be completed by October or November 2024.
NHPC’s monetisation efforts align with the Union government’s broader agenda, outlined in the National Monetisation Pipeline, which identifies core assets across various sectors for potential monetisation between 2021-22 and 2024-25. The power sector alone includes ₹39,832 crore worth of hydropower and renewable energy assets, along with power transmission assets worth ₹45,200 crore.
NHPC is also aggressively pursuing its expansion goals, with plans to more than double its power generation capacity from 7,144 MW to 14,561 MW by 2026-27. This includes a mix of hydropower, pump storage, and solar projects. Despite the company’s long-term growth trajectory, NHPC faced short-term challenges in the April-June quarter, with its net profit falling 5.66% year-on-year to ₹941.07 crore, and revenue declining by 2.29% to ₹2,694.20 crore.
NHPC’s shares have performed well in 2024, gaining around 41% year-to-date. As of the most recent trading session, the stock closed at ₹93.47 on the NSE, down 0.82%.
This new round of fundraising, alongside the company’s robust expansion plans, positions NHPC to play a crucial role in India’s energy transition, while also contributing to the Union government’s monetisation goals for the power sector.