NHPC, India’s largest hydropower company, is planning to raise around Rs 20 billion through asset securitization in the upcoming financial year as part of its strategy to fund expansion projects. Although the specific assets for securitization have not yet been finalized, internal discussions are on-going. In the previous financial year (FY25), NHPC successfully met its monetization target by securitizing the free cash flow (return on equity) of its Dulhasti Power Station located in the Union Territory of Jammu & Kashmir. This securitization, spanning the next eight years, generated total proceeds of Rs 23.48 billion. Similarly, in FY24, the company monetized the return on equity from the Kishanganga Power Station, also situated in Jammu & Kashmir, for a period of eight years. Securitization involves converting expected future cash flows or illiquid assets into securities that can be sold to investors. These securities offer a stream of income through interest and principal payments. This financial strategy allows NHPC to leverage future earnings to meet its current funding needs while maintaining ownership of its assets. Under the Union government’s National Monetization Pipeline, the power sector comprises 7 per cent of total assets on offer. This includes 6 gigawatts (GW) of hydropower and renewable energy generation assets worth Rs 398.32 billion, alongside transmission assets valued at Rs 452 billion. For NHPC, a Navratna public sector enterprise, the funds raised through securitization will support its expansion into hydropower, pumped storage, and solar power projects. Once the assets are finalized, NHPC will invite bids from banks and non-banking financial companies. The institution offering the most favourable financial terms—either the lowest discount rate or the highest upfront amount—will be selected, with the asset pledged while NHPC retains ownership. News source: Live Mint