The Hindu Business Line : FIs told to `fine-tune' services to make power projects viable

THE Union Power Minister, Mr P.M. Sayeed, has asked financial institutions lending to the power sector to "fine-tune" their services in line with the changing market conditions to make more projects viable.

"The acid test for bankability of a project is its commercial viability. Low tariff projects will have no problem of sale of power or any problem of payment by utilities. This is what we should aim at," Mr Sayeed said at a meeting of private sector borrowers organised by Power Finance Corporation.

Lenders and borrowers need to understand each other, he said, adding that in today's business environment it was important for the lenders to constantly remain in touch with borrowers.

"They need to fine-tune their services in line with the changing market conditions. This is the mantra that all successful business entities must follow," Mr Sayeed said.

He further added that FIs must consider their borrowers as business partners. With the New Electricity Act in place, this problem of non-bankability should be resolved.

The Centre, he said, had been playing the role of afacilitator between FIs and private players for speeding up financial closure, and eight projects, with a capacity of 3,000 MW, had been cleared so far this year. Eight more projects with a total capacity of 9,000 MW will achieve financial closure soon.

He said the power sector would require an investment of Rs 8,00,000 crore for generation and associated works in the next eight years and private players would have to play a greater role to achieve the target.

Assuring private players of full cooperation, the Power Secretary Mr R.V. Shahi, said the Ministry was holding periodic meetings with the Ministries of Petroleum, Coal and Environment for faster clearance of power projects. He also said finance was not a problem for these eight projects and funds would be tied up soon.

However, some projects were yet to sign power purchase agreements with their buyers and some others had to arrange for fuel requirement.

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