PFC may invite fresh bids for consultant on banking plans

State-owned lending agency Power Finance Corp, which is mulling an entry into the banking space, may invite fresh bids for appointment of a consultant on the proposal, as only one company qualified during a previous tendering exercise.

"In government tendering, the company cannot appoint a consultant if only one agency qualifies... It affects healthy competition... Therefore, PFC will have to invite the tender again," a Power Ministry official said.

Under the first tender, five consultants -- ICRA, Crisil, Deloitte, PwC and KPMG -- submitted their bids, but only KPMG qualified.

"PFC is awaiting board approval for re-inviting the bids... Which is expected shortly," the official said without specifying any timeline.

Power Finance Corp, while launching its follow-on public offer in May, had also announced that the company is keen on foraying into the banking sector, either by picking up equity in banks or acquiring one completely. The company would seek advice on the matter from the consultant it would appoint.

In May this year, PFC came out with a follow-on offer through which it mopped up about Rs 4,600 crore. The FPO involved a 5% stake sale by the government and the issuance of 15% fresh equity by the Navratna firm.

Post-FPO, the government's share in the company came down to about 84%.

The company will utilise the proceeds of the FPO for disbursing loans during the current financial year (2011-12).

Power Finance Corp is engaged in financing power generation and transmission projects.

The company, which has set a target for borrowing Rs 30,000 crore during the current financial year (2011-12), will do so partly by issuing tax-free and infrastructure bonds, along with other instruments.

Last year, PFC was given the status of an infrastructure finance company -- a move that enabled the entity to mop up funds by issuing tax-free infrastructure bonds.