Pfc Term On Loan Sanction Puts Orissa In A Fix

The power scene in Orissa seems to be heading for the worse with Power Finance Corporation (PFC) slapping certain conditions for release of sanctioned loan.

Grid Corporation of Orissa (Gridco) had sought Rs 1200 crore loan from PFC to ease liquidity problem of the company and pay back the pending dues of National Thermal Power Corporation (NTPC).

NTPC had been issuing threats of power regulation to the state at regular intervals demanding clearance of dues. There is High Court stay on power regulation by NTPC up to June 22. Sources said, if PFC loan money is not made available by that time to facilitate payment of NTPC dues, the utility major may resort to rationing of power after that.

Though PFC, sometime back, had sanctioned Rs 1200 crore loan to Gridco, it has released only Rs 200 crore from the amount. For release of the rest money, it has attached several conditions which have to be met by the government, Gridco and private power distribution companies in the state.

The PFC loan carries an interest rate of 9.5 per cent with an additional two per cent payable in case of default in payment. The loan is to be paid back in eight years. While in the first three years only interest has to be paid, in the next five years both principal and interest have to be paid.

According to state energy minister SN Patra, PFC has stipulated that the state government should stand guarantee for the entire loan.

Besides, it has sought an assurance from the government that in the event of privatisation of Gridco in future, the pending loan amount payable to PFC should be cleared at one go without deducting any amount owed by Gridco to the government from the loan money.

Similarly, PFC has set certain terms for Gridco. This included that Gridco should open an escrow account with PFC and pledge its shares in the four distribution companies to PFC. For distribution companies, PFC conditions said, they should pledge their company's shares with PFC.

Further, in case the distribution companies fail to pay in tune with their business plans, the promoters of these companies, BSES, AES and the state government, should have to stand guarantee for making the payments.

The sources said, the PFC conditions have put power managers in the state in a quandary. Meeting the conditions appeared to be tough task for the authorities.

As the conditions laid out by PFC involved a lot of financial implications, the state energy department has sought the approval of the finance department for acceptance of the conditions, Patra said.