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POWER FINANCE CORPORATION LIMITED (A Navratna PSE)

POWER FINANCE CORPORATION LIMITED (A Navratna PSE). Financing of Renewable Energy & Energy Efficiency Projects February 4 th , 2009. We Create Possibility of a Better Tomorrow…. Agenda. 1. PFC Overview . 2. Thrust by PFC on financing Renewable Energy Projects. 3.

JasminFlorian
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POWER FINANCE CORPORATION LIMITED (A Navratna PSE)

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  1. POWER FINANCE CORPORATION LIMITED (A Navratna PSE) Financing of Renewable Energy & Energy Efficiency Projects February 4th , 2009 We Create Possibility of a Better Tomorrow…

  2. Agenda 1 PFC Overview 2 Thrust by PFC on financing Renewable Energy Projects 3 Role of PFC in Climate Change Key Strengths 4

  3. PFC Overview • Set up by the Govt of India on Jul 16, 1986, as a dedicated Financial Institution for the Power Sector • Declared as a Public Financial Institution (PFI) in 1990 • Registered as an NBFC with RBI in 1997 • A Profit-making and Dividend-paying Company, with Net Worth of Rs. 9,587 Crs. & Loan Assets of Rs. 60,441 Crs. (as on Dec 31, 2008) • Declared as a Navratna PSE by the Govt of India in Jun, 2007 PFC – One of the most successfully managed public enterprises

  4. PFC Overview • Authorized Capital - Rs. 2000 Crs • Paid up Capital – Rs. 1147.77 Crs • Maiden IPO concluded & over-subscribed by 77 times • Record by any PSE to have such an oversubscription • ISO 9001:2000 Certification for all the three Divisions of PFC, viz. Projects, F&FO and ID&A • PFC conferred with ‘KPMG-Infrastructure Today Award 2008' in the Most Admired Government Enabler-Power category on 10th Dec’2008. PFC – One of the most successfully managed public enterprises

  5. PFC Overview (cont’d) • Designated by Govt of India as the Nodal Agency for the development of UMPPs • Consultancy Services • PFC Consulting Limited (a wholly owned subsidiary of PFC), set up to promote, organize and carry on consultancy in related activities of PFC • Designated by the MoP as the Nodal Agency for availing CDM benefits for the R&M of Thermal & Hydro Generation Projects • ADB Technical Assistance (4992-IND) of $ 1 million for SPU’s • Facilitating single window lending through Power Lenders Club • Established “Power Lenders Club” with LIC, HUDCO and ten Indian Banks • Facilitates ‘Single Window Lending’ for borrowers in power sector • Signed MoUs with State Nodal Agencies of Maharashtra, Karnataka, TNEB & Gujarat for facilitating joint financing of renewable energy, energy efficiency & conservation projects.

  6. Borrower’s Profile • State Power Utilities • State Government Power Departments • Central Power Utilities • Joint Sector Organizations • Independent Power Producers • Co-operative Societies • Municipal Bodies • Power Equipment Manufacturers

  7. Product Range (Fund Based) • Rupee term Loan • Foreign Currency term Loan • Debt Re-Financing / Restructuring • Lease Finance • Direct Discounting of Bills scheme for Buyers and Sellers • Medium Term / Short Term Loan to equipment manufacturers • Buyer’s Line of credits

  8. Product Range (Non-Fund Based) Guarantees • Guarantee for loans • Contract Performance Guarantee

  9. PFC Performance at a Glance

  10. PFC Performance at a Glance

  11. PFC’s Contribution to Indian Power Sector (Feb 03, 2009)

  12. Composition of Loan Sanctions(Feb 03, 2009) Project-wise (%) Sector Mix (%) Cumulative Sanctions – Rs. 2,21,763 Crores

  13. Composition of Loan Disbursements(Feb 03, 2009) Project-wise (%) Sector Mix (%) Cumulative Disbursements – Rs. 1,01,888 Crores

  14. Term Loan Period of Finance • Moratorium of 6 months after scheduled commissioning • Repayment period Hydro - 20 years Thermal - 15 years Transmission & Distribution - 15 years • No moratorium for fully commissioned projects under DRS.

  15. Contd…. Term Loan Extent of Exposure • PFC Net-worth is Rs. 9,587 crores as on date • Also, if appointed as lead FI, PFC can facilitate syndication of required debt completely through Power Lenders Club.

  16. Project Appraisal System • Two stage appraisal process First stage - Preliminary appraisal Second stage - Final appraisal • Each stage involves analysis of : • Track record of promoters(3 years Balance sheet, project const./operation experience, etc.) • Creditworthiness of promoters (credit history, ability to bring equity, etc.) • Proposed project’s viability is evaluated in terms of technical, financial, Commercial, legal parameters.

  17. Term Loan - Security Cover Primary Security • Charge on assets of the Project/ Company. • Charge on receivables of the Project / Company. • Assignment of Contracts. Collateral Security • Pledge of shares/ Corporate guarantee, Trust and Retention Account (TRA) etc. (to cover specific project related risks arising out of appraisal)

  18. Agenda PFC Overview 1 Thrust by PFC on financing Renewable Energy Projects 2 Role of PFC in Climate Change 3 4 Key Strengths

  19. Key Statistics – Renewable Energy As on Feb 03, 2009

  20. Key Statistics – Renewable Energy As on Feb 03, 2009

  21. Wind Power – Lease Financing Scheme • To finance all major capital equipment / machinery essential for power project (except the items mentioned in specific exclusion list). • Primary lease period shall be fixed and non-cancelable and shall be up to 12 years from rental commencement date keeping in view the economic life of equipment/machinery as 20 years. • The lease finance from PFC shall be up to 85% of the cost of the project • Carbon Credits shall be shared equally between Lessor and the Lessee • Lessee shall bear all O&M cost to keep equipment(s) in good running condition during the tenure of lease period. • Value for each transaction shall not be less than Rs.10 crs • Exclusions : • Land • Civil works • Erection / Testing / Commissioning Costs

  22. Solar Power – Grid connected under MNES Generation based Incentive Scheme • Support for maximum cumulative capacity of 50MWp during the 11th plan period. • Max. cumulative capacity of 10 MWp in any State. • Any developer can set up grid interactive projects of up to 5 MWp capacity as single or multiple projects. • Minimum capacity for a project is 1 MWp. • MNRE will provide financial assistance of Rs.12 per KW hour of energy fed to the grid. • Interest Rates : 3/10 Year AAA Bond Yield + 80 bps • Extent of Finance : Upto 70% of Eligible Project Cost • Repayment : 8 years and Moratorium : 6 months (after commissioning)

  23. Policy for Energy Conservation/ Energy Efficiency Projects Extent of funding Private sector For project cost up to Rs. 25 Crore : Up to 70% of project cost For project cost exceeding Rs. 25 Crore : Up to 70% of Rs 25 Crore plus up to 50% of project cost exceeding Rs 25 Crore Central / State sector : Up to 90% of project cost Interest rate : 12.50% Repayment period : Up to 5 years Moratorium : 3 months from date of Commissioning of the project

  24. Special Focus to Renewable Energy Financing Extent of Funding Category Public Sector Pvt Sector Thermal Generation 80% 20% Medium & Large Hydro 80% 25% Wind / Biomass / Small Hydro 80% 50% Solar Power Generation 70 % 70% Energy Efficiency Projects 70% 70%

  25. Contd… Special Focus to Renewable Energy Financing

  26. Agenda PFC Overview 1 Thrust by PFC on financing Renewable Energy Projects 2 Role of PFC in Climate Change 3 4 Key Strengths

  27. BACKGROUND – CDM ACTIVITIES IN PFC • 1. Ministry of Power has nominated PFC for assistance to state utilities in preparation of CDM projects for R&M of generating units both thermal and hydro. • 2. PFC has been nominated as nodal agency for R-APDRP by MoP, GoI and it has also been desired that a CDM cell for facilitating the CDM benefits to State Power Utilities for reduction of T&D losses in the APDRP shall be created in PFC.

  28. Condt… BACKGROUND – CDM ACTIVITIES IN PFC Facilitation of CDM benefits for R&M projects of SPUs • ADB has sanctioned grant of US$ 1 million under the Technical Assistance (TA 4992-IND) through PFC to facilitate availing of carbon credits under CDM by state sector power utilities for RM&U of old generation projects. • ADB has engaged PricewaterhouseCoopers (PwC) for preparation of PDD and methodology etc. and assist state power utilities upto registration of their projects with UNFCCC. • A number of potential projects in various states have been identified by M/s PwC for coverage under the grant.

  29. Condt… BACKGROUND – CDM ACTIVITIES IN PFC Facilitation of CDM benefits for R&M projects of SPUs • The states where R&M projects are identified are : • (1) Andhra Pradesh, (2) Gujarat, (3) Haryana, (4) Himachal Pradesh, (5) Jammu & Kashmir, (6) Jharkhand, (7) Karnataka, (8) Kerala, (9) Tamil Nadu, (10) Maharashtra, (11) Meghalaya, (12) Punjab, (13) Madhya Pradesh, (14) Orissa, (15) Uttar Pradesh, (16) Uttarakhand, and (17) West Bengal. • 4.1 Interaction is being made with other states for identification of projects.

  30. Condt… BACKGROUND – CDM ACTIVITIES IN PFC Facilitation of CDM benefits for R&M projects of SPUs • 5. More than 10 projects have been taken up for PDD development out of which PDDs of 5 projects have been completed and submitted to ADB, PFC and the respective utilities. • 6. The PDD for R&M of Machkund Hydro Power project has been submitted to the DNA (MoEF). • 7. PDDs for three other projects i.e. Umiam HEP (Meghalaya), Giri HEP (Himachal Pradesh) and Poringalkuthu (Kerala) shall be submitted to DNA shortly.

  31. Agenda PFC Overview 1 Thrust by PFC on financing Renewable Energy Projects 2 Role of PFC in Climate Change 3 4 Key Strengths

  32. Why PFC is the preferred funding agency for Indian Power Utilities: • Leading Financial Institution with 20% market share having in depth understanding of the issues of power sector. • Offer bouquet of products and services and customizes the products to suit borrowers’ requirements. • Close Relationship with all State Power Utilities and State Governments. • Exempt from Prudential Norms including sectoral limit.

  33. Why PFC is the preferred funding agency for Indian Power Utilities: • High net-worth enables PFC to take higher exposure. • Hand holding of clients till completion of the project. • Established “Power Lenders Club” with LIC, HUDCO and ten Indian Banks to facilitate single window lending for borrowers in power sector and achieve faster financial closure. • Disbursement system ensures asset formation. • Full fledged Consultancy Services offered by wholly owned subsidiary which provides services at competitive rates.

  34. Why PFC is the preferred funding agency for Indian Power Utilities: • Funding for the entire loan component of the project cost: • a) No Sectoral exposure cap unlike Banks • b) PFC Net-worth is 3 times of competing banks ensuring more than 3 times the Bank exposure availability • c) Funding to the tune of 70% of the project cost for Solar & Energy Efficiency Projects. • d) Syndication of entire loan through Power Lenders Club for other loans • e) Funding of IDC as a loan component • f) Funding project cost overrun, on merits of the case.

  35. Why PFC is the preferred funding agency for Indian Power Utilities: • Longer Effective loan tenure extending upto 20 years for hydro projects after actual gestation and moratorium period. • a) 6 months period for principal repayment after CoD. • b) Benefits: • Lighter debt service. • Higher DSCR of entity due to lower repayment, strengthening entity credit worthiness. • Lower first year tariff, Levellised fixed tariff.

  36. Why PFC is the preferred funding agency for Indian Power Utilities: • Competitive Interest Rate with lowest other charges: • a) Attractive Interest rates as compared to other Fis: • Strong Balance sheet (low NPA), highest safety rating and sovereign rating helps maintain low borrowing cost. • Low NPA (only 0.03%) than Banks. Cost of NPA is added back in fixing lending rates. • Operating expenses is low at just 0.11% (un-annualized) of average assets. • Interest rebate of 0.25% on commissioning of the project. • c) Processing Fee of 0.1% of the loan amount sanctioned by PFC. • d) No Commitment charges for the loan proposals.

  37. Competent and Committed Workforce Sanctions per Employee (FY 2008) Rs. 226 Crores Disbursement per Employee (FY 2008) Rs. 53 Crores • Workforce of 317 employees as of Dec 31, 2008. • 194 executive employees and 123 non-executive employees • More than half our employees have been with us for over 10 years • Our executives have domain knowledge in different fields: • Power Sector • Project and Entity Appraisal • Project Financing • International Finance • Domestic Resource Mobilization Our executives have professional qualifications including management, accountancy, engineering and law

  38. How to apply Loan? • Loan application can be made in the prescribed application format. • The application can be down loaded from the web site of PFC ; www.pfcindia.com • The application to be submitted to Delhi office • For any clarification please contact : • Sh.A.K.Jain, • Executive Director (Renewable Energy & CDM) • Urjanidhi, 1, Barakhamba Lane, New Delhi –110001. • TELEFAX: 23456683; E-MAIL:akjain5@pfc.delhi.nic.in

  39. THANK YOU

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