PFC signs MoU with banks on consortium

Special Correspondent

NEW DELHI: The Power Finance Corporation (PFC) has gone in for a banking consortium in its bid to provide a `single window' access to funds for 20-25 per cent of the country's power projects. Apart from the Life Insurance Corporation (LIC), the other ten members of the consortium are Bank of Baroda, Canara Bank, Central Bank of India, Corporation Bank, Indian Overseas Bank, Jammu & Kashmir Bank, Oriental Bank of Commerce, Punjab National Bank, Syndicate Bank and Union Bank of India.

A memorandum of understanding (MoU) with the 11 financial institutions to this effect was signed here on Thursday.

Talking to presspersons after signing the MoU, PFC Chairman and Managing Director V. K. Garg, said the consortium move would help adopt a common approach for financing power projects which would, in turn, lead to all-round development of the sector. In effect, the earlier irritants faced by the potential power developers to procure credit lines would not be there as the consortium would have uniform terms and conditions [for lending], Mr. Garg said.

In addition, PFC would function on a consultancy basis with insurance companies for providing cover to power companies. The corporation, Mr. Garg said, was planning to fund projects for fuel linkage to power plants such as captive coal mining and LNG terminals, mainly for power plants. The PFC chief, however, clarified that lending to fuel projects was a PFC initiative and the other consortium members would have to take their own individual decision in this regard.

Plans IPO

For later this year, PFC also has plans to enter the capital market with an initial public offering (IPO) to mop up about Rs. 1,000 crore, subject to the Centre's approval. Mr. Garg said PFC had dropped plans to foray into banking and insurance, the two sectors it was trying to get into so as to access cheap funds for onward lending to power projects.