``Project-specific bonds on the lines of international project bonds could be floated in the domestic debt market for enabling provident funds and bonds to take an exposure in power sector in tune with their liability structure,'' the chamber said.

In a paper submitted to the power ministry, the chamber said, developing and nurturing the NRI investible funds market on a sustained basis would provide a stable and attractive source of funding for these projects.

The process of financial closure for the power projects could be expedited by selecting sources that are already active in specific projects and also by addressing specific project requirements by providing prospective financing sources, the chamber said.

Stating that the escrow account needs to bestreamlined, the paper said, a dedicated or pooled escrow stream, plant load factor (PLF) requirement, billing/collection and accounting procedures should be created.

Assocham said projects may also plan to enter the retail market after the construction phase or after cash flow seasoning is available.

A two-tranche finance package should be worked out so that financial institutions or banks finance the first tranche for two to five years, while the second tranche is available through the market, Assocham said.

While the first tranche would be at a higher cost due to project completion risks, the second and subsequent tranches could be of long-term bonds on recourse basis at better rates as operations would have already begun, the paper said.

A pre-escrow financing should be worked out wherein a financial institution would finance new generation projects for the commissioning period without an escrow account, but would recourse to escrow account established soon after generation and sale of powerstarts, it said. Even after factoring in cost of this credit enhancement, the all-in-cost could be favourable to the issuer as compared to what he would have to pay in absence of this credit support, Assocham added.