NHPC Ltd., India’s largest hydropower company, is in talks with three of Japan’s biggest banks to help fund its expansion into solar power.
(Bloomberg) — NHPC Ltd., India’s largest hydropower company, is in talks with three of Japan’s biggest banks to help fund its expansion into solar power.
NHPC wants to borrow as much as 50 billion rupees ($609 million) in yen-denominated loans and is in talks with Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and the Japan Bank for International Cooperation, finance director Rajendra Prasad Goyal said.
The company expects yen-denominated debt to be cheaper than domestic loans. This is critical for the highly competitive solar market in India, where NHPC is building out 1.2 gigawatts of solar projects to widen its green energy portfolio.
“Foreign lenders are inclined to fund solar,” Goyal said in an interview. “We are trying to avail of that opportunity.”
Unlike hydropower projects, which are developed in a cost-plus model due to the inherent challenges in construction, solar and wind projects are awarded in closely fought auctions, with participants undercutting opponents’ bids displayed live on an electronic screen.
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The company had long-term debt of about 253 billion rupees as of March, more than 90% of it borrowed from domestic sources. It plans to commission its solar projects by the end of 2025, according to Goyal.
This would be the first time in four years NHPC is looking to borrow overseas. The company is seeking at least a 10-year tenor to suit its cashflows, Goyal said.
As the company adds solar, its largest business will remain producing electricity from water. The company has almost 7 gigawatts of operational hydropower plants and 9.3 gigawatts of capacity is under construction, according to its website.
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