KOLKATA: Power Finance Corporation (PFC), the central nodal agency for financing power projects, is in talks with LIC, NTPC and Rural Electrification Corp (REC), to launch the Rs 1000-crore India Power Fund (IPF) by March 31. The proposed IPF will inject seed capital to support all shades of private power ventures, be it generation, transmission, distribution or captive. PFC has received a firm commitment only from LIC which will contribute an undisclosed sum into the Rs 1000 crore IPF corpus. PFC will pump in Rs 200 crore into the IPF.
Confirming this, PFC’s director (projects) and board member Shyam Wadhera said: “So far, we’ve only received a firm commitment from LIC though there is no decision on its investment into the corpus. There is no decision on other possible partners, though we have sounded out both NTPC and REC and are also talking to top commercial banks and multilateral funding agencies. We would like to kick off the fund by March 31.”
Mr Wadhera was talking to reporters on Wednesday during the Kolkata-leg of PFC’s roadshow in the run-up to its IPO which opens on January 31.
Elaborating on PFC’s India Power Fund strategy, Mr Wadhera said “PFC, LIC and other partners will provide seed capital for greenfield power ventures after assessing their financial viability on a case-to-case basis. The IPF corpus will, typically, handle a slice of the equity component of power projects that may be funded through a 70: 30 debt-equity ratio. We believe an independent power project developer will find it lot easier to raise debt once the IPF handles a piece of its project equity component.”
Significantly, a PFC-promoted special purpose vehicle (SPV), Jharkhand Integrated Power Ltd, will invite `request for qualifications’ (RFQs) on January 31 from potential bidders for the proposed 4000 mw pit-head ultra mega power project in Barhi, in Jharkhand. The subsequent submission of bids, evaluation, short-listing, qualification and issue of letters of intent (LoI) to bidders is slated to take several months, said PFC officials.
Under its proposed UMPP business model, the PFC SPVs will initiate studies, draft project reports, facilitate statutory clearances for coal mine and water allocations and award the projects to eligible bidders through the tariff-based international competitive bidding (ICB) route. Once the bidder is selected for executing a particular UMPP, the specific PFC-controlled SPV will transfer the shares to the bidder company after recovering all pre-project execution-related expenses from the bidder.
Source : Economic Times