In order to raise funds from the domestic money markets for hydro power development, it has been suggested that major Indian government-owned power utilities float ‘hydro bonds’.

The recommendation was made by two financial institutions appointed as consultants by the federal Ministry of Power to advise it on federal power reforms and related issues. The consultant’s report was given to the Power Ministry last March and is under discussion. In the mean time, the federally-owned Power Finance Corporation (PFC) will raise US$150M from money markets overseas to meet its financial requirements for the current financial year, following a practice started two years ago. Last year, New Delhi-based PFC raised US$100M.

PFC is a major financier of hydro projects in India, especially those executed by the state power utilities.