Pfc Loan For Bengal Linked To Sectoral Reform
West Bengal's chances of getting a substantial loan from the Power Finance Corporation (PFC) has now been linked to how fast the state initiates reforms in its power sector.
The PFC chairman, Dr Uddesh Kohli, told Business Standard that a loan of $250 million is being negotiated with the Asian Development Bank (ADB). This loan will be utilised to finance various projects in the three states of West Bengal, Assam and Punjab.
Kohli said that PFC is yet to consider specfic schemes from these states for the ADB credit. However, this loan will be earmarked for these states for the calendar year of 1999.
The World Bank which too has agreed on principle to extend more credit to PFC, has set similar conditions that the beneficiary states must speed up reform in their power sectors.
At the moment, PFC is negotiating for two foreign lines of credit - two loans of $500 million each from ADB and the World Bank. The post-Pokhran sanctions are not likely to influence disbursement of the credit. The loans will rather be linked to the process of power sector reforms.
PFC had disbursed Rs 2,000 crore loan in 1997-98 and has set itself a target to increase the loan disbursement by 25 per cent to Rs 2500 crore.
Its funds will be sourced from the World Bank, ADB, other external commercial borrowings, and issue of various bonds in the domestic market. Another Rs 500 crore will coome from internal accruals.
Kohli said that PFC has very recently signed ECB for $100 million at a low interest. It proposes to raise another 100/150 million dollars of ECB. But, the timing wll be linked to the market.
The post-Pokhran sanctions, he said, have merely slowed down the ECB. It took PFC three weeks to raise $100 million. "We could do it in just one day had sanctions not been there", said Kohli.
Bengal has already set up a multi-member committee led by a former member of the Central Electricity Authority (CEA), N C Basu to suggest necessary reforms in the state's power sector. One part of the report concerning the creation of a separate corporation for the state's rural areas has already been submitted and almost fully accepted by the state government. It is in tyhe process of of creating the West Bengal Rural Energy Development Corporation carving it out from the West Bengal State Electricity Board (WBSEB).
However, the Basu committee is still busy finalising the remaining portions of the report. It is generally expected that the committee will recommend seperation of the functions of generation and transmssion of power. n the process, all the thermal generating plants of the state will come under the umbrella of the West Bengal Power Development Corporation and the transmission and distribution of power in urban areas outside Calcutta will be the charge of the WBSEB.
If reforms are fast, flow of funds will match the speed, PFC has assured the Bengal power officials.