All charged up

Calcutta, March 28: The inter-institutional group (IIG) of lenders have fixed a May deadline for financial closure of power projects that could generate 10,000 MW.

The group comprises Industrial Development Bank of India (IDBI), ICICI Bank, State Bank of India (SBI), Power Finance Corporation (PFC) and Infrastructure Development Finance Company (IDFC).

The exposure of financial institutions (FIs) and banks to these projects is to the tune of Rs 27,000 crore to 28,000 crore. This includes the 3,000 MW of Dadri project of Reliance Energy (REL), in which FIs have invested Rs 6,000 crore.

All promoters taken together have sunk Rs 38,000 crore into these projects. Sources in IDBI said the lenders’ group has recently taken up the financial closure of the eight independent projects currently in the works.

“There are eight independent power producers with a total capacity of 5196 MW. The investment involved is around Rs 21,514 crore. This is part of the 10,000-MW additional generation expected from projects close to their financial closure,” the IDBI sources added.

However, members of the group are unanimous on the view that tariff will be the overriding concern in providing financial assistance to promoters of the projects.

“The funding should be sanctioned when we find that power is being provided at a competitive cost. That will be the deciding factor. To achieve this goal, we have taken a firm decision that we will stay away from financing those projects where we find tariff rates to be uneconomical,” said a senior official of ICICI Bank.

The independent power projects for which banks and the FIs are holding talks include Raigarh Power project (500 MW), Gautami Power Project (464MW), coal-based GVK Mangalore (1015 MW) and Nagarjuna Malana II hydel power project (100 MW). Others on the list are Everest Akankhol (1050 MW), Torangalu expansion project (500MW), Jindal Karcham Wangtoo hydel project (1,000 MW) and Jai Prakash power project (567 MW).

SBI Capital Markets’ managing director and CEO Indrajit Gupta said the power ministry is taking keen interest in ensuring the new projects come up as fast as possible.

“Meetings between FIs and department concerned are held every week to discuss the progress of projects. The government has identified 20 critical ones, those the ministry feels should come up at the earliest,” said Gupta.

SBI Capital Markets is tipped to get a deal under which it will help Bengal revamp its creaky power sector. It is closely working with the Assam State Electricity Board in its reforms initiative.

It is also helping Maharashtra, Goa, Daman and Diu in the same area. SBI Capital Markets is also assisting the electricity boards in Karnataka and Chhattisgarh to raise Rs 1,500 crore each from the market. The funds are meant to revamp their boards.

The government has set a power-to-all target, to be achieved for 2012. “To bridge the gap between the goal and the current capacity, 1,00,000 MW needs to be added in the coming years,” power department officials said.