Pfc Mulls Dollar-Denominated Guarantee

Power Finance Corporation (PFC) is considering a proposal to provide a dollar-denominated deferred payment guarantee (DPG) to the Chinese equipment company ZMEC, which is supplying equipment to the 420 mw Rayalseema power project in Andhra Pradesh.

The DPG amounts to around Rs 2,300 crore after taking into account all the risks excluding the foreign exchange risk.

Speaking at a press conference, PFC chairman and managing director Uddesh Kohli said that the Andhra Pradesh Generating Corporation (APGENCO) had approached the PFC because the state government cannot give a guarantee to any foreign company.

Kohli however said that PFC has not yet agreed to the proposal as APGENCO had asked the guarantee to be provided at 0.25 per cent _ which is far lower than the rate at which PFC extends guarantees. He said that PFC extends DPG at around 1.2 per cent to companies.

He clarified that the discussions were already on with APGENCO on this issue.

Kohli also said that PFC was planning to mobilise up to $200 million from the international market as part of its resource mobilisation programme for the year 2000-01.

He said "we have got quotations from various bankers for mopping up between $150-200 million through the external commercial borrowings route and would move with a firm proposal for government approval within this month."

The corporation is likely to go in for roadshows during June for mobilising the amount on a fixed rate of interest on a repayment schedule of 10 years, Kohli indicated. He said that the PFC was looking for long-term money from either the US market under Section 144A or through Euro bonds.

Kohli said that PFC would retain the option to swap to floating rates depending upon the market conditions.

Announcing a 15 per cent rise in net profit at Rs 622 crore in 1999-2000, Kohli said that PFC had estimated a total resource mobilisation of Rs 2,200 crore during 2000-01 but no split between the domestic and international fund mobilisation plan had been worked out.

Kohli added that "we would borrow money depending upon the domestic as well as the international market conditions and in case we get a good offer from the international market then majority of the fund would be mobilised from there," he said.

Last year PFC had targeted a resource mobilisation of Rs 2,000 crore out of which it mopped up $100 million through ECBs.