Power generation gets lions share of PFC loan book

Written by Sanjay Jog | Mumbai | Updated: Nov 15 2009, 03:48am hrs
State-run Power Finance Corporations (PFC) disbursements to transmission & distribution loans are lower than its generation schemes. In fact, the loan book of PFC, which is mainly engaged in providing traditional loans and other non-fund-based products to power utilities, is highly skewed towards generation schemes.

As on September 30, the share of generation scheme is 83% of its assets. PFCs cumulative disbursements till September end is around Rs 1,21,982 crore and sanctions at Rs 2,60,585 crore. Loan assets composition comprises generation at Rs 56,720 crore (83%) for the first half of the current fiscal, transmission Rs 6,527 crore (10%) and distribution at Rs 3,490 crore (5%).

Where the generation and distribution companies are in the state sector, we do not envisage any problem of default by distribution companies to generation companies and therefore we do not envisage any recovery problem for us. Where generation companies sell power to private distribution companies, they have escrow arrangement, whereby payment problems are taken care of. Hence, we do not see any additional risk in financing generation schemes, a PFC official told FE.

While justifying PFCs loan assets tilt towards generation, the official informed the project costs of generation are large and disbursements there are also huge.

As far as funding for transmission sector is concerned, the official said inter-state transmission schemes are implemented by the PowerGrid Corporation of India, which is the central transmission utility. It raises funds on its own in the domestic and international market, including multilateral agencies, for financing their projects.

However, the official said in the first quarter of current fiscal, PFC has sanctioned two projects -one in a joint sector and another in private sector - for transmission schemes. The total sanction amount is of the order of Rs 1,866 crore.

In the distribution sector, both state and private sectors play important roles. The restructured accelerated power development & reform programme envisages investment of Rs 10,000 crore in Part A in three years and about Rs 50,000 crore in Part B in the 11th Plan. PFCexpects its share in the distribution sector to go up in the coming years.