Icra reaffirms AAA rating for NHPC long-term bonds

Icra has reaffirmed its AAA rating on Rs 4,000-crore long-term bonds programme of the state-owned NHPC.
The outlook on long-term rating is 'stable', Icra said in statement.
According to the statement, Icra's AAA rating for NHPC reflects its established position in the hydro power generation industry in India, its significant size of operating projects and strategic importance, which is also reflected in consistent support from the government in terms of low cost subordinated debt for some of its projects.
Icra also notes competitive tariffs of its plants with an average tariff of Rs 3.67/kwh during 2015-16 (adjusted for previous years income) and strong operating efficiencies, as reflected by average plant availability factor (PAF) of 81.6 per cent in 2015-16 (against normative availability of 77.80 per cent).

Furthermore, with the commissioning of two units of TLDP-IV in 2015-16 and the remaining two units during first half of 2016-17 and 50 MW wind power project during Q3 2016-17, there is visibility on increase in revenue and profit streams, it said.
The rating continues to reflect low business risks arising out of favourable demand outlook in view of the power deficit scenario in states and cost plus tariff mechanism applicable for its hydel based power generating stations.
Further, it said the rating continues to factor in the healthy track record of power generation from operational hydel projects arising out of favourable hydrology and ability to maintain high operating availability.

The credit profile is also supported by a conservative capital structure and strong liquidity despite the large size of projects under construction.