Mumbai:
The Industrial Development Bank of India (IDBI), which
has a large presence in power projects, has dropped its
plans to adopt a reform-based financing pattern for independent
power projects.
 Instead,
it is planning to continue with its traditional three-tier payment
security mechanism escrow cover, letter of credit and state
guarantee for financing new power projects. Indias leading
financial institutions, including IDBI, were pursuing a
reform-based approach in the power sector financing, as the
concept was projected as an economically feasible mode for
financing power projects.
Under the reform-based financing, state governments, state
electricity boards and other lenders to the projects have to enter
into a memorandum of agreement. The state and its SEB also have to
undertake obligations to achieve reform milestones in a time-bound
manner as prescribed by the lenders.
Also, the lenders will enjoy a charge over the revenues of SEBs
along with the banks that provide capital. Moreover, the escrow
cover will have to be made available to the lenders 31 days before
the commercial operation of the project. But the IDBI board
recently decided that the security mechanism has to be ensured
before financing any new project and, under the given
circumstances, IDBI feels escrow is the most viable security
mechanism.
"The payment risks continues to be the most important
impediment to financing power projects, as the financial health of
the SEBs is deteriorating day by day. Besides, problems of lack of
tariff rationalisation, high transmission and distribution losses
are the other major hurdles in the Indian power sector,"
says a top IDBI source.
The Industrial Development Financial Corporation was the first
financial institution that implemented the reform-based financing
in the Karnataka state for the Karnataka Power Trading Corporation
two years ago. The outcome of this new experiment is yet to be
known.
Following this, the Andhra Pradesh government had introduced this concept
for financing around six projects with an installed capacity of
over 2,500mw last year. But an FI source say the process did not
go any further from the preliminary levels.
Aptransco, a party to the agreement, had failed to provide escrow
cover to two projects even after their successful commissioning.
These projects together generate over 550mw (300mw from the
Kondappally project and 250mw from the Spectrum project). Andhra
then promised to evolve a business plan for the transmission
companies by February 2002. But, so far, no headway had been made,
the source say.
|
|
