PFC to set up subsidiary for renewable energy sector

Power Finance Corporation, a Navratna public sector lender, is in the process of creating a wholly-owned subsidiary for the renewable energy sector, in a couple of weeks, to be called PFC Green Energy Ltd.

M K Goel, director (commercial), PFC, told reporters here today that this sector required relatively smaller amounts and had not been getting adequate priority. The government's policy push through the Jawaharlal Nehru National Solar Mission was also a factor, he said.

He declined to give any targets for the new company, saying it would depend on government plans.

On exposure to East Coast Energy Pvt Ltd, at the centre of protests from local people at its project site in coastal Andhra’s Srikakulam district, PFC executive director Arunava Chakravarti said they’d lent Rs 227 crore as part of a Rs 700-crore loan from a consortium. These were based, he said, on clearances from the ministry of environment and forests, and all the loans were secured. "If something (new) is done by the ministry, then we will have to take a call," he said.

PFC is in the process of calling request for qualification for two new ultra mega power projects (UMPPs), in Orissa and Chhattisgarh by the end of March and June 2011, respectively.

These had been delayed by the No-Go norms of the environment ministry, said Goel. Another coal-fired UMPP proposed to be set up along the Tamil Nadu coast was awaiting clearance from the National Institute of Ocean Technology, under the Coastal Regulation Zone norms, he said.

Goel confirmed PFC's plans for a follow-on public offer but did not specify a date. The company had also set up internal business-focus groups to diversify into consortium lending, loan syndication, equity financing and acquisition advisory services. In March 2008, it had set up a wholly-owned subsidiary, PFC Consulting Ltd, for offering consultancy services. PFC is raising Rs 5,300 crore in long-term infrastructure bonds, issued in four tranches.

The funds to be raised would be used for project financing, short-term loans and consortium lending, according to Parminder Chopra, deputy general manager (finance).

Investments up to Rs 20,000 in these bonds offer tax benefits under section 80 CCF, over and above the Rs 1-lakh exemption limit. The bonds carry a face value of Rs 5,000 and are available from one unit and multiples thereof. The offer closes on March 22.