SJVNL securitizes 1.5 GW Nathpa Jhakri hydropower project cash flow
3 min read . Updated: 09 Jan 2023, 12:18 AM IST
PremiumThe power sector comprises 14% of the total assets on offer under the overall ₹6-trillion NMP announced in August 2021 from leasing of public assets.
NEW DELHI : State-run SJVNL has securitised the cash flow of India’s largest hydropower project—Nathpa Jhakri—with Bank of Baroda for a 15-year period under the government’s National Monetisation Pipeline (NMP) for an upfront payment of ₹2,000 crore, said two people aware of the development.
SBI Capital Markets Ltd was the transaction advisor for SJVNL for its 1.5 GW project in Shimla that supplies electricity to Delhi, Haryana, Himachal Pradesh, Punjab, Jammu & Kashmir, Rajasthan, Uttar Pradesh, Uttarakhand, and Chandigarh. The process saw participation from both state-run and private banks, with the monetization to help fund the equity portion of upcoming projects. The first tranche of ₹1,000 crore has already been disbursed to SJVNL.
This upfront payment by Bank of Baroda will add to the government’s ₹1.62-trillion NMP target for the current financial year. The power sector comprises 14% of the total assets on offer under the overall ₹6-trillion NMP announced in August 2021 from leasing of public assets. Power generation assets totalling 6 GW of hydropower and renewable energy assets account for ₹39,832 crore. Power transmission assets total 28,608 circuit km for monetization, accounting for ₹45,200 crore.
“The securitization process of the cash flow of Nathpa Jhakri hydropower project by SJVNL has been completed. Several public and private sector banks participated in the process," said one of the people cited above requesting anonymity.
An SJVNL spokesperson in an emailed response confirmed the development and said, “Total ₹2,000 crore has been securitized in two tranches with Bank of Baroda out of which ₹1,000 crore tranche-1 has been disbursed on 28 November 2022."
Queries emailed to the spokespersons of Bank of Baroda, SBI Capital Markets, and union ministries of power and finance on Friday morning remained unanswered till press time.
SJVNL has a 45 GW portfolio and is developing 73 hydro, solar, wind and thermal projects in 13 states of India and in Nepal. While the union government holds 59.92% stake in the Mini Ratna, the Himachal Pradesh government holds 26.85% stake. The overall power sector NMP target for the current financial year is ₹15,308 crore from state run firms including Power Grid Corporation of India Ltd (PGCIL) second tranche of assets through its infrastructure investment trust (InvIT), India’s largest power generation firm NTPC Ltd plans to bring in a strategic investor in NTPC Green Energy Ltd and securitization of cash flows by NHPC Ltd and SJVN Ltd. While proposals totaling ₹16,500 crore under power sector are under processing, the final realization by the end of this financial year is expected to be ₹11,500 crore.
Mint earlier reported about the finance ministry considering the possibility of linking budgetary support to infrastructure ministries based on their asset monetization performance starting the next fiscal year.
The NMP target is likely to be missed, with projects totalling ₹33,100 crore completed under the NMP for the current financial year, and a final total of ₹1.24 trillion expected to be garnered by the end of 2022-23. Power sector along with roads, coal, mines, and ports is among the better performing sector for NMP that targets sectors such as roads, ports, airports, railways, warehousing, gas and product pipeline, power generation and transmission, mining, telecom, stadiums, hospitality and housing for lease to the private sector.
“The top 5 sectors (by estimated value) capture 83% of the aggregate pipeline value. These top five sectors include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%). Roads and Railways together contribute 52% of the total NMP value," said the volume-II of NMP.
The union budget of 2021-22, identified monetization of assets as one of the three pillars for enhanced and sustainable infrastructure financing in the country. National Monetization Pipeline also assumes importance given that ₹6 trillion targeted from it will help contribute towards the National Infrastructure Pipeline (NIP) that has a projected infrastructure investment of around ₹111 trillion by 2025.
