State-run hydropower company NHPC Ltd is set to raise around ₹2,300 crore this financial year, exceeding its initial target of ₹2,000 crore. This move is part of the Union government’s monetisation target and will help fuel NHPC’s expansion efforts. The funds will be raised by securitising the return on equity of its Dulhasti Power Station in Jammu and Kashmir for eight years, while NHPC retains ownership of the project, according to sources familiar with the matter.
Securitisation involves converting illiquid assets or expected future cash flows into investable securities. Investors receive returns in the form of interest and principal on these securitised assets.
This development is significant as the power sector comprises 7% of the total assets on offer under the Union government’s national monetisation pipeline. As a Navratna company, NHPC is relying on this monetisation to fund its hydropower, pump storage, and solar power expansion projects.
NHPC has invited bids from banks and non-banking financial companies for its securitisation plan. The financial institution offering the lowest discounting rate or highest securitisation amount will be selected, with the Dulhasti Power Station pledged as collateral. The expected discounting rate is around 7.9%, which is considered favorable.
Initially, NHPC planned to implement the monetisation in the third or fourth quarter of 2024-25, but due to liquidity needs, the process was expedited. A company spokesperson confirmed that the securitisation will be completed by October or November, with NHPC maintaining full control and ownership of the project.
NHPC has successfully implemented similar securitisation plans before. In FY24, it raised ₹2,046.94 crore by monetising the return on equity of its Kishanganga Power Station.
India’s national monetisation pipeline, developed by Niti Aayog, includes power generation assets totaling 6 GW, representing ₹39,832 crore, along with power transmission assets worth ₹45,200 crore. Public sector power companies are employing various strategies to maximise value, including IPOs, cashflow monetisation, and infrastructure investment trusts.
NHPC aims to more than double its power generation capacity from the current 7,144 MW to 14,561.20 MW by 2026-27. The company reported a 5.66% drop in net profit for the April-June quarter, totaling ₹941.07 crore, with revenue dipping by 2.29% to ₹2,694.20 crore.
NHPC’s stock has gained about 41% in 2024, closing Tuesday’s NSE trading at ₹93.47, down 0.82%.
