Pfc Plans Rs 225cr Bond Mop-Up

Power Finance Corporation (PFC) plans to raise Rs 225 crore from the domestic market through the issue of taxable bonds on a private placement basis. This was disclosed by Uddesh Kohli, chairman and managing director of PFC at a press conference here yesterday.

Based on the increasing interest rates for Indian paper, Kohli indicated that Power Finance Corporation might postpone its plans of tapping the foreign markets to raise $150 million to the next financial year.

Even though a decision to this effect has not been taken, Kohli said that they were closely monitoring the foreign markets.

The foreign currency debt issue which PFC had planned to issue is presently being rated by S&P. Moodys has already accorded a rating for the issue.

The $150-million ECB is part of the $250 million that PFC had planned to raise during the current financial year.

The corporation has already raised $100 million through a Euro-issue at 7.5 per cent with a maturity period of 12 years.

Kohli also said that PFC had recently signed an agreement with IKB Bank of Germany for 100 million deustche marks which would specifically be used for financing imports from designated countries by various borrowers of PFC.

The corporation also plans to make a major foray in the Indian power sector by entering into bridge financing, equity participation in projects as well as providing credit to suppliers.

PFC has already decided to provide finance against working capital requirements of state utilities.

This would only include the state electricity boards and projects undertaken by central public sector undertakings.

PFC would, however, continue to accord top priority for lending towards renovation and modernisation programmes undertaken by the state electricity board and financing of on-going projects.

The Union cabinet had recently approved a proposal of the corporation and ministry of power to reduce its lending rate by four per cent.

This interest cuts equate to a subsidy of Rs 200 crore, which would be borne by the Centre. PFC would however be lending on the subsidised rates to projects which come under the above mentioned category.

The government expects to increase the installed capacity by around 4000 MW as well as increase the power availability by four billion units through the above programme.