Domestic financial institutions and lenders have asserted that finance would not be a problem to achieve the proposed 78,577-mw capacity addition during the 11th Plan. The power ministry has estimated financial requirement of $100 billion for the same. They have, however, made a strong pitch for the rationalisation of taxes and duties, in order to ensure a suitable payment mechanism to improve project economies and settlement of power offtake issues.
Power ministry sources told FE that IDBI has suggested that capital and operation costs be minimized, the transmission capacity be strengthened and the procurer should enter into long-term fuel supply agreements for fuel supply and power purchase. According to IDBI, the concerned departments and agencies should allot coal linkages/coal blocks to the power developers and there should be transparency in environmental clearances. Sources said a sub-committee had been formed to look into all these issues and find out solutions so as to make funds available to the power sector in a more smooth and transparent manner.
Moreover, Infrastructure Leasing & Financial Services Limited (IL&FS) has emphasised the need for policy intervention to sort out issues relating to offtake, fuel supply, equipment supply/ EPC (engineering, procurement and construction).
It has observed that power deficit would continue in the foreseeable future, assuming that GDP would continue to grow at a reasonable rate of 6%-plus per annum, power tariffs would continue to harden?short-term rates have crossed Rs. 8.4 per unit. Besides, it has made it clear that availability of finances – both in domestic and foreign markets ? was not an issue and lenders were willing to take substantial risks.