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Our Infrastructure Bureau
New Delhi, Sept 10: Power Finance Corporation (PFC) has decided to mop up Rs 600 crore through a public issue of taxable bonds and Rs 150 crore from private tax-free bonds.
PFC has also approached State Bank of India to tap part of the funds it mopped up from the Resurgent India Bonds (RIBs). "We have approached SBI, but the exact amount of funds and the rate at which the corporation could get them are not yet decided," said Uddesh Kohli, chairman and managing director at PFC, here on Thursday at a press conference. The government had announced that the RIB proceeds would be used to fund the development of infrastructure in the country.
On whether the corporation would be able to get the RIB amount from State Bank, Kohli said, ``PFC is a developmental financial institution and I see no reason why SBI should not give us certain amount from RIBs.'' As per the Reserve Bank of India guidelines, PFC is still a non-banking financial institution and the corporation has approached the RBI for developmentfinancial institution status.
Giving details about its plans to mobilise Rs 600 crore through the public issue, Kohli said that PFC has appointed SBI Caps for preparing the due diligence report for the bond issue and will soon decide the name of the lead manager for this issue.
"PFC will be tapping money from the public for the first time. This issue is expected to hit the market by November this year," Kohli added.
PFC director, finance, TN Thakur said that SBI Caps is likely to submit its due diligence report for the bond issue by this month-end. Soon after that PFC would go to the Securities and Exchange Board of India (Sebi) for clearance.
PFC has already mobilised Rs 350 crore from various banks at prime lending rates and the corporation intends to achieve a disbursement level of Rs 5,500 crore in 2001-02, Thakur added.
Kohli said that PFC has been given full freedom to raise resources and invest without taking recourse to case-by-case clearance from the government.
"Authorisation for thiscame from the power ministry last month and the PFC board amended its memorandum of association in its annual general meeting held on September 9. The clause seeking presidential approval, as is needed in case of any public sector units going to the market every time, has been removed and PFC is now free to raise resources," Kohli said.
Significantly, the Reserve Bank of India has also exempted PFC from the prudential norms applicable to non-banking financial institutions, relating to its capacity to borrow till June 2000.
Kohli said that PFC's profit after tax in 1997-98 stands at Rs 528 crore and the corporation aims to disburse Rs 5,500 crore by 2001-02, achieving a growth rate of 30 per cent.
PFC will provide major financial packages for those state electricity boards which intend to set up the regulatory commissions. Kohli said that PFC would offer financial packages to the states taking up reforms and also give them concessions in its lending conditions.
"Those states who give us a writtencommitment stating their willingness to set up the state electricity regulatory commission will be entitled for financial benefit package worked out by the corporation. The lending conditionalities that would be relaxed include the credit exposure limit of state electricity boards and the rate of return earned by them," Kohli said.
Kohli said that PFC has constituted a ``reform group'' which will provide technical assistance to state electricity boards. The Asian Development Bank has agreed to provide a $1 million grant under the technical assistance scheme.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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