NHPC to issue Rs 1,000 crore worth tax free bonds this fiscal

State-run NHPC, which has ambitious diversification plans, will come out with its first tax-free bonds issue worth Rs 1,000 crore this financial year.

The leading hydel power producer, having an installed power generation capacity of 5,702 MW, plans to hit the market with tax-free bonds in October.

"Recently, the company received approval from the Finance Ministry to raise up to Rs 1,000 crore through issue of tax-free bonds. This is the first time the company will be issuing tax-free bonds," NHPC director (Finance) A B L Srivastava told PTI. With tax-free bonds, the borrowing costs would be less.

"We expect to come out with the issue in October. We will have just one tranche for the issue," he said. In the current fiscal, the company's construction budget is Rs 3,450 crore out of which Rs 1,831 crore has been planned under debt funding.

"The debt portion will be raised from market as per the suitability of time and market conditions either as term loan or in the form of bonds," Mr. Srivastava said. NHPC, a potential candidate for the government's disinvestment programme, is awaiting approvals for about 10 projects having a total capacity of 8,801 MW. This includes five joint venture projects with cumulative capacity of 3,686 MW.

Meanwhile, the company is working on diversifying into thermal, solar and wind power generation segments.

"We are in discussions with various states, including Bihar, Chattisgarh and Orissa to explore the possibility of setting up thermal power plants.

"We are looking to set up only super critical plants having generation capacity of at least 660 MW," Mr. Srivastava said.