Power for All by 2012 We Create Possibility of a Better Tomorrow November 25, 2014 Financing Renewable Energy Projects by PFC

2 We Create Possibility of a Better Tomorrow PFC – An overview Established in 1986 as a Public Financial Institution meant for development of Power Sector Government Ownership with 26.28% public holding Leading lender to Indian Power Sector with around 20% market share. Consistent ‘Excellent’ rating under MoU with GoI since first year Conferred with “NAVARATNA” status on June 22, 2007 ISO 9001 : 2000 Certified “Project Appraisal System” Strong asset quality reflected in low NPAs Funds all types of projects in Power Sector Extends financial assistance to all types of borrowers

3 We Create Possibility of a Better Tomorrow PFC – An overview….Contd. Faster financial closure through Power Lenders Club. Facilitates development of UMPPs in various states. Offers Consultancy services through PFC Consulting Ltd, a wholly owned subsidiary of PFC

4 We Create Possibility of a Better Tomorrow Key Statistics of PFC As on Note : 72.8% held by GoI; 11.79% held by FIIs ParticularsIn ` crores (rounded off) Cumulative Sanctions4,83,127 Cumulative Disbursements3,17,921 Loan Assets1,99,064 Networth27,755 Share Holder’s Funds30,373 Total Borrowings1,67,016

5 We Create Possibility of a Better Tomorrow PFC Green Energy Limited (PFCGEL) PFCGEL was incorporated on 30 th March, 2011, as a wholly owned subsidiary of PFC to extend finance and financial services exclusively to promote renewable energy Authorised capital of PFCGEL - ` 1,200 Crore Subscribed & Paid up capital - ` 300 Crore

6 We Create Possibility of a Better Tomorrow Key Statistics – PFC Renewable Energy Funding As on Sep 30, 2014 No. of Projects99 Capacity Supported1637 MW Sanctions (INR crore)5,899 Disbursements(INR crore)3,253

7 We Create Possibility of a Better Tomorrow Sl. No. Type of Project No. of Projects Capacity in MW Sanction Amount (INR Cr.) Amount Disbursed (INRn Cr.) 1Solar PV Solar Thermal Wind Biomass Small Hydro Total As on Sep 30, 2014 Key Statistics – Sector wise Achievement

8 We Create Possibility of a Better Tomorrow State Power Utilities State Government Power Departments Central Power Utilities Joint Sector Organizations Independent Power Producers Co-operative Societies Municipal Bodies Power Equipment Manufacturers Borrower’s Profile

9 We Create Possibility of a Better Tomorrow Rupee term Loan Foreign Currency term Loan Debt Re-Financing / Restructuring Lease Finance Direct Discounting of Bills scheme for Buyers and Sellers Medium Term / Short Term Loan to equipment manufacturers Buyer’s Line of credits Product Range (Fund Based)

10 We Create Possibility of a Better Tomorrow Product Range (Non-Fund Based) Guarantees Guarantee Letter of Comfort for opening L/C under term loan sanctions

11 We Create Possibility of a Better Tomorrow Rupee term Loan Debt Re-Financing Letter of Comfort for opening L/C under term loan sanctions Product Range - PFCGEL

12 We Create Possibility of a Better Tomorrow Issues - Solar Projects High capital cost High cost of generation Reverse bidding process for selection of developers under NSM may affect the viability due to low tariff. i.e. Tariff should give comfortable average DSCR of not less than 1.2 during the loan repayment period Low IRR compared to other RE projects Technologies like CSP and Solar PV Thin film not well established Degradation of Solar Panels over a period of time reduces efficiency and generation revenue Non availability of authenticated solar insolation ground data Absence of performance guarantee with identified recourse from manufacturers to take care of sustainable performance including degradation Trading of solar REC is yet to take off in a big way

13 We Create Possibility of a Better Tomorrow Procedure for loan sanction ● Receipt of loan request. ● Request for additional information from borrower, if required. ● Preparation of agenda note for loan sanction from the competent authority. ● Issue of sanction letter alongwith terms and conditions of sanction. Project Appraisal and Sanction ● Finalization of security (if not finalized during appraisal) ● Execution of MoA and other security related documents. ● Execution of default Escrow Agreement. ● Receipt of quarterly drawl schedule. Loan Documentation ● Compliance of pre-disbursement conditions. ● Receipt of equipment & material schedule. ● Receipt of claims for reimbursement. Loan Disbursement

14 We Create Possibility of a Better Tomorrow Project Appraisal System Two stage appraisal process First stage - Preliminary appraisal Second stage - Final appraisal Each stage involves analysis of : ● Track record of promoters (3 years Balance sheet, project const./operation experience, etc.) ● Creditworthiness of promoters (credit history, ability to bring equity, etc.)

15 We Create Possibility of a Better Tomorrow Disbursement System Disbursement schedule and drawal - decided by the borrower Progress-linked disbursement - ensures effective utilization of funds. Option for disbursement of advance - upto 15% of the loan amount Facility to avail drawls after commissioning - upto six months after completion of project. (In case of Private Sectors, disbursement is made on the recommendation of Lender’s Engineer)

16 We Create Possibility of a Better Tomorrow Lending Policy - Term Loan Period of Finance - PFC Moratorium of 6 months after commissioning (12 months for solar projects) Repayment period – upto 12 years Period of Finance - PFCGEL Moratorium of 12 months after commissioning Repayment period : Solar projects - upto 12 years : Other projects - upto 15 years

17 We Create Possibility of a Better Tomorrow Primary Security Charge on assets of the Project/ Company. Charge on receivables of the Project / Company. Assignment of Contracts. Collateral Security Pledge of shares/ Corporate guarantee, Personal Guarantee, Trust and Retention Account (TRA) etc. (to cover specific project related risks arising out of appraisal) Term Loan - Security Cover

18 We Create Possibility of a Better Tomorrow Thank You

19 We Create Possibility of a Better Tomorrow Term Loan interest Rates (RTL) Scheme State Sector Borrowers (Category 'A+’) [AND] Identified CPSUs [AND] AAA rated Companies State Sector Borrowers (Category 'A' ) [AND] Central Sector Borrowers (Other than Identified CPSUs & AAA rated) Private Sector Borrowers (Generation Projects with Integrated Rating of IR-1 Private Sector Borrowers : (a) Generation Projects with Integrated Rating of IR-2 (b) Entity Grade : E I & E II Private Sector Borrowers : (a) Generation Projects with Integrated Rating of IR-3 (b) Entity Grade : E III & E IV (c) Discom : Grade A Private Sector Borrowers : (a) Generation Projects with Integrated Rating of IR-4 Private Sector Borrowers : (a) Generation Projects with Integrated Rating of IR-5 (b) Discoms : Grade B. (c) Entity Grade : E V (d) Non- graded. Renewable Energy Generation Projects (Wind, Biomass & Small Hydro) & Energy Efficiency Projects 11.75%12.00%12.25%12.75%13.00%13.25%13.50%