The projects with long-gestation periods and operating losses, or very low returns during initial years should be provided concessional interest rate and security package. For example, in the telecom projects, the licence fee can be treated as an asset. The suggestions have been made in a paper prepared by the chamber.

The capital cost of a power project ranges between Rs 4 and 7 crore per mw. At present, FIs insist for the minimum promoters' contribution of 17.5 per cent to 20 per cent of the project cost. The guidelines issued by the central government for private sector participation in power projects have proposed promoters' contribution as 11 per cent of project cost.

Keeping in view the volume of investment required, thechamber has suggested that the promoters' contribution needs to be lowered to a reasonable level, from 11 per cent to 15 per cent depending upon case to case.

For funding the infrastructure power projects, FIs charge a very high rate of interest of 18.5 per cent per annum, in addition to quarterly payable tax. FIs themselves are raising funds at a concessional rate (12 to 13 per cent) by way of `infrastructure bonds', on which the tax rebate is allowed to investors, the chamber says.After adding a reasonable margin, FIs should charge a reasonable rate of interest of not more than 14 per cent to 15 per cent per annum in respect of power projects. The implementation period of infrastructure projects is about about six to seven years. With the present interest of 18.5 per cent to 19 per cent, the interest cost during the implementation period practically works out to half of the total term loan assistance.

Also, the front-end fee of 1.05 per cent of the loan amounts payable at the time of signing of the loandocuments should be waived which will reduce the burden on power projects to some extent.

For setting up infrastructure or power projects, the concerned state governments are required to acquire government or forest land, as also private land under the Land Acquisition Act. Due to several formalities, particularly those regarding the government or forest land, which are beyond the control of the private entrepreneurs, creation of substantive security takes long time.The institutions start charging additional interest of 1.05 per cent immediately after the loan amount is disbursed, till the substantive security is created. Keeping in mind the circumstances, the chamber feels that after disbursement, a time of at least 365 days should be allowed to the promoters for creation of regular security and till then, no additional interest of 1.05 per cent be charged.