BHEL plans NBFC to fund power projects

State-run Bharat Heavy Electricals Ltd (BHEL) plans to float a non-banking financial company (NBFC) to finance power projects, according to its Chairman and Managing Director B Prasada Rao.

Rao said the power equipment maker had appointed consulting company Crisil to study the model and the report was likely to be submitted in six weeks.

“For now, we are looking at only power projects. If we find scope for others, including equipment financing, we will look into it. We will take a final call after we receive the report,” he said. He was speaking to reporters after inaugurating production bays at its Ranipet Unit, around 150 kilometres from Chennai.

Rao said the new financial arm had enough scope, while two other niche funding institutions, Power Finance Corporation and Rural Electrification Corporation, also had their space. ICICI Bank, IDBI Bank, Infrastructure Development Finance Company Ltd, International Finance Corporation, State Bank of India, and Indian Renewable Energy Development Agency Ltd are the other major financiers.

The Eleventh Five Year Plan (2007-12) has set a target of adding 78,577 megawatt power generation capacity, which would attract investment worth Rs 10.3 lakh crore.

Industry experts believe the power sector, which has an exposure of around Rs one lakh crore to various banks and financial institutions, is likely to face difficulty in raising money during the Twelfth Five Year Plan. They said, “Banks and financial institutions must have reached their exposure cap to the sector, so raising further money is going to be difficult and BHEL can tap the funding market.”