| Tower of hope
Calcutta, Nov. 2: Power Finance Corporation (PFC) has asked IDBI, ICICI Bank, State Bank, and other banks and state power utilities to work out a well-knit payment security system for independent power producers (IPPs). The payment security system determines the price at which utilities buy energy from independent power producers.
Till now there have been certain gaps in this payment system. State utilities, major buyers of power from IPPs, have also failed to provide a perfect revenue model for buying power, a senior PFC official said.
Independent power projects in India are plagued by controversies and frequent policy changes. Even banks and FIs are apprehensive of funding independent power projects. A case in point is IDBI, which burnt its fingers in the Dabhol project where it had huge exposures.
“To encourage independent power producers in the country, banks, FIs and state utilities should sit together and work out a well-knit payment security system,” the official added.
IDBI officials said, they were working on a proper payment security system.
Lenders have to be encouraged to step up their investments in power projects. They have to chip in with loans of longer tenure and at competitive rates, the PFC official added.
The government wants to put in place a reliable power supply for all by 2012. The present installed capacity is 1,08,000 MW with energy and peak shortage touching 9.3 and 12 per cent respectively. The government expects to double the capacity by 2012 at an investment of Rs 8,00,000 crore.
“State utilities alone cannot meet the gap. Independent power producers too have their roles to play. Power projects are capital intensive and have long gestation periods. As a result, banks and FIs are shaky while funding them,” the PFC official said.