Idfc Pins Riders On Rs 100 Crore Karnataka Project Loan

The Infrastructure Development Finance Company (IDFC) has spelt out a road map for power sector reforms in Karnataka as part of a loan agreement for Rs 100 crore.

The corporation has laid down a number of conditions for sanctioning Rs 100 crore to the 210 mw Raichur VII power project.

Deepak Parekh chairman said at a press conference, "This can emerge as a model agreement to be followed by other states and by Karnataka for other future projects".

The first step is the privatisation of distribution in the state. At present, the Karnataka Power Corporation (KPCL) is in charge of generation, while the Karnataka Power Transmission Corporation (KPTCL) is in charge of distribution and transmission. The distribution areas of KPTCL will be worked out and the distribution companies will be operational by June 2001.

The privatisation will be done on the advice of a consultant who will also come up with a financial restructuring plan. This will involve restructuring of the balance sheet of KPTCL, through various measures like write offs, waiver of recievables and disinvestment. The dues of the state owned - power utilities till March 31, 2000 in Karnataka will be frozen and securitised.

Secondly the proceeds realised from the privatisation KPCL and KPTCL will be deposited in a dedicated power sector fund which will be utilised by the state government to meet it obligations in the power sector.

The state government will also have to make public the power demand -supply situation in the state. This will remove all ambiguities about and enable lenders and investors to arrive at a correct decision on the risks involved in power sector funding.

The state government, KPCL and KPTCL have to agree to comply with all the orders of the state power regulator Karnataka Electricity Regulatory Commission. The transactions between the state government, KPCL and KPTCL will be on a commercial basis. An energy audit to determine transmission and distribution losses will be completed by March 2001 and metres will be installed for all consumers by June 2003. The dues of the state's power utilities will be securitised and bonds issued.