Indian Power Sector Financing the Growth

Mission  Power for all by 2012 National Goal is to provide reliable, affordable and quality power for all by 2012

Objective: To promote competition by allowing entry of private sector in generation, transmission, distribution and trading of electricity ELECTRICITY ACT 2003

Power Development - 16th EPS Projections Peak requireme nt in MW Energy requireme nt in BU

Future Projections Tenth Plan( )  Capacity addition41,110 MW of which Central Sector: 22,832 MW State Sector: 11,157 MW Private Sector: 7,121 MW  Total investment envisaged during 10th Plan is of the order of Rs. 4 lakh crores. (Source: Ministry of Power / Kohli Committee Report)

Funds Requirements (X Plan) Source: Kohli Committee Report to MOP

Future Projections Eleventh Plan( )  Capacity addition62,213 MW of which Central Sector: 24,283 MW State Sector: 12,340 MW Private Sector: 25,590 MW Source: Kohli Committee Report to MOP

Funds Requirements (XI Plan) Source: Kohli Committee Report to MOP

Funds Requirements (Sector – wise) With privatisation, requirements likely to shift from State to Private Utilities. Include requirements for 12 th Plan starts Exclude transition period of reform/restructuring of states require- ment (Rs. 100,000 crores) and non-conventional energy projects. Estimate on completion cost basis. Source: Kohli Committee Report to MOP

Funds Requirements (Function - wise) Source: Kohli Committee Report to MOP

Funding of Power Sector Source: Kohli Committee Report to MOP

Power Finance Corporation Financing the Power Sector

Financing of R&M  Government Support: AG&SP provides upto 3% interest subsidy (4% for special category states)  Direct PFC Lending: Interest Rate:9% p.a. payable quarterly Moratorium:Construction period + 6 months Repayment:upto 12 years

ADB Line of Credit  Interest Rate for Rupee Loan T&D:8.25% p.a. payable quarterly R&M:8.75% p.a. payable quarterly  Possibility of Foreign Currency borrowing on back-to-back basis

KFW Line of Credit  Available for Hydro RM&U only  Interest Rate for Rupee Loan:8.75% p.a.  Possibility of Foreign Currency borrowing on back-to-back basis  Provision of specialised training of borrowers’ personnel

Financing of T&D  Government Support: APDRP provides for: 50% Government Funding (25% as Grant & 25% as Govt. Loan) 50% counterpart funding by FIs  PFC Lending: Interest Rate: 8.50% p.a. (reduction of 0.5% after commissioning of transmission schemes costing more than Rs. 50 crores) Moratorium: Construction + 6 months Repayment: Upto 12 years Special rebate of 0.25% if included under ADB

Financing of Hydro StatePrivateSector Intt. rate during construction 9.25% 9.75% / 10.50% Intt. rate after commissioning 8.75% 9.25% / 10.00% Moratorium construction period + 6 months Repayment15 years10 years

Financing of Thermal StatePrivateSector Intt. rate during construction9.25% 9.75% / 10.50% Intt. rate after commissioning8.75% 9.25% / 10.00% Moratorium construction period + 6 months Repayment12 years10 years

Grants / Soft Loans / Computerisation (State Sector) Soft Loans:5% p.a. Computerisation 6% p.a. Repayment 5 years Grant for R&M / R&U / RLA / DMS Studies