New Delhi: State-run lender Power Finance Corporation plans to launch a private equity fund for private companies to encourage their participation in power sector and help meet the government’s 11th plan capacity addition target.
The company would tap equity investment from leading domestic and international investors operating multi-billion dollar funds, official sources said.
The government has set a target to add fresh generation capacity of 78,000MW during 2007-12, along with necessary transmission and distribution network. This would require a mammoth investment of Rs10,00,000 crore ($250 billion).
The private sector led by Tata Power accounts for around 15% of the country’s power generation capacity. In contrast, state-run NTPC alone generates about 29%.
“Our aim is to fund last-mile equity to private power firms without diluting management stake and control of the project developers. The necessary approvals from the finance and power ministries have been obtained,” the sources added.
Private players like Tata Power and Reliance Energy have lined up aggressive capacity addition targets. Anil Ambani-led REL has announced Rs60,000 crore investment plan to generate 15,000MW electricity in five years from the present 951MW.
The government’s ultra mega power projects being awarded on competitive tariff-based bidding process also generated huge interest from private companies. PFC, the nodal agency for these projects, has already transfered two projects to REL and TPC at Sasan, Madhya Pradesh and Mundra in Gujarat.
PFC has an asset base of $11 billion, while its net worth stands at $2 billion. The company enjoys 20% market share through providing financial assistance in the form of debt.