Power Finance Corp to raise Rs 23,000 cr

Power Finance Corporation Ltd (PFC), a public-sector undertaking having Navratna status is planning to raise Rs 23,000 crore through bonds during 2009-10 to fund ultra mega-power projects (UMPP).

Mr Satnam Singh, chairman and managing director of PFC, said: “Three new UMPP — one each in Chattisgarh, Orissa and Tamil Nadu — are in the pipeline and in the second quarter of this fiscal, discussions would be in the final stages.” PFC also has approached the Nuclear Power Corporation and has conveyed its willingness to partly fund its nuclear projects, he said.

PFC has reported 12.3 per cent growth in net profit to touch Rs 1,355 crore for the fiscal 2008-09 compared with Rs 1,207 crore in the earlier fiscal. In the fiscal 2008-09, PFC has incurred mark-to-market losses of Rs 230 crore due to currency fluctuation.

The company’s net profit rose by 32.22 per cent to Rs 390.58 cr for the quarter ended March 31, against Rs 295.40 cr over the same period last year. Its total income rose to Rs 1,816.93 cr during the quarter, against Rs 1,365.18 cr in the same period last fiscal.

Mr Satnam Singh said: “In the past few months, power projects were affected due to the credit crunch. Banks were not lending and external commercial borrowings also dried up. But in 2008-09, loan disbursement grew by 30 per cent at Rs 21,054 crore from Rs 16,211 crore in 2007-08.”

In 2008-09, loan disbursements in the renewable energy sector was about Rs 178 crore and this fiscal, they are targeting Rs 360 crore for the renewable energy sector, he added.

While mentioning that PFC would help all power projects to raise funds,

Mr Singh said that Reliance Power might tie up with PFC this month to fund its 4,000 mega-watt UMPP at Sasan.

The power project is estimated to cost Rs 19,000 crore and is likely to be funded at a debt equity ratio of 75:25. The debt component for project would be raised by a consortium of banks led by State Bank of India. Pointing towards the huge political support for the power projects,

Dr Soumendra Dash, chief economist of Care Ratings, said: “Central and state governments are coming forward to help the power sector as there is a huge demand and supply gap. State governments are giving guarantees to funds raised through bonds. The governments are also coming forward to plug the losses due to subsidised or free power.”