The Hindu Business Line : Greenfield power projects to come under rating watch

Rating time
The move is expected to improve the bankability of individual power projects.
It is also expected to activate the bond market as a source of long-term funding.
Discussions carried out with the four rating agencies — Duff and Phelps, Crisil, CARE and ICRA.

New Delhi , March 9

Large greenfield power generation projects could soon come under the ratings scanner. In a move initiated on the behest of financial institutions and banks lending to the power sector, new greenfield projects, starting with the five new `ultra mega' power projects, could come under the rating watch of the country's four rating agencies.

The measure is expected to improve the bankability of individual power projects and provide additional degree of comfort to lenders for facilitating speedy financial closure, according to Government officials.

The move is also expected to activate the bond market as a source of long- term funding for power projects and also trigger the interest of venture capital funds and facilitate international resource mobilisation, officials said. The ratings are expected to be an ongoing process.

"Detailed discussions have already been carried out with the four rating agencies — Duff and Phelps, Crisil, CARE and ICRA. The rating agencies have submitted an initial paper for the rating of the `ultra mega' projects to the lending institutions," an official involved in the exercise said.

The ratings process is expected to entail certain assumptions regarding the expected financials of the projects and could prove crucial in light of the need for long-term funds of 20-year duration or more for the long gestation projects.

Each of the five proposed `ultra mega' power projects, with capacities of up to 4,000 MW, is expected to entail investments of around Rs 15,000 crore.

"Power projects are highly capital intensive and for funding them recourse to publicly issued debt is mostly necessary. The rating methodology being envisaged is mainly aimed at facilitating appropriate credit risk assessment for each project, keeping in view the overall characteristics of the power sector and the time horizon over the life of the debt instrument being rated," an official said.

The issues that would be taken into the consideration include the nature of power project — whether it is hydel, thermal, nuclear or non-conventional, its technical characteristics, the generation capacity, the credit worthiness of the promoters, location of the project, infrastructure requirements for operations, fuel requirement, implementation schedule, selling and distribution arrangements and the final tariffs, officials said.

More Stories on : Infrastructure | Power | Credit Rating

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Cyclonic circulation over Gujarat

Hutchison Essar revenue rises 41 pc in 2005

AI Express may skip Delhi, Mumbai this summer

Greenfield power projects to come under rating watch

`Even the man on the street has focused too much on equity'

`No move to derecognise private sector PF trusts'

Cisco bullish on healthcare

Wal-Mart may enter India with local partner

RBI wants immediate action on interest relief to farmers

Kanbay to invest $50 m more in India operations