Newly appointed PFC chairman and managing director AA Khan told The Financial Express that its team would leave for Japan by the end of January or early February and conduct road shows there. "We are confident of raising the amount by the end of March 2001," he said.

PFC, which has decided to offer consultancy services on reforms in a big way, will also seek a line of credit of $250 million from the Asian Development Bank (ADB) by the end of this year at 8.5-9 per cent. "The ADB mission team is expected to be in India in early March when the necessary modalities in this regard will be worked out. The ADB board is likely to clear our proposal by September," he added.

Mr Khan said that the PFC would provide funds to those states which have taken a decision to go in for power sector reforms and restructuring in a big way. These states and the respective state electricity boards (SEBs) should have identified the projects and prepared proposals and detailed project reports. "PFC will also provide technical assistance to such states," he added. According to Mr Khan, PFC has shortlisted Maharashtra, Karnataka and New Delhi for providing assistance from the proposed ADB line of credit. He however, reiterated that these states should first chalk out complete investment plans.

Furthermore, Mr Khan said that the PFC would go in for external commercial borrowings to provide funds to reforming states. He added that nearly Rs 3,000 crore would be raised domestically during the current fiscal and disbursed to various states. Mr Khan said that PFC had recently mobilised a record Rs 450 crore at 11.3 per cent through private placement. He added that PFC would provide assistance of around $100 million to implement power projects in Assam and West Bengal. Mr Khan said that it has received reports from consultants and a draft agreement with the respective state governments would be prepared shortly. Mr Khan said that PFC, in association with Industrial Bank of India (IDBI), and Industrial Credit and Investment Corporation of India (ICICI), has evolved an alternative escrow mechanism to expedite project implementation by independent power producers in various states.

"According to this mechanism, the respective SEBs would have to pay concurrent charges during the project's construction. However, after the completion of the project, financial institutions will have first charge on revenue," he added. Mr Khan said that SEBs would have to follow a few appraisal parameters such as reduction in transmission and distribution, or an increase in cash collection efficiency. He said that the BPL project in Hyderabad would be the first project which would benefit from the alternative escrow arrangement.