By Sachin Murdeshwar

Mumbai ： 

Power Finance Corporation : Significant highlights and achievements in FY 2017-18 

1. Diversification in Business

• Recorded robust loan asset growth of 14% this year

o   Due to PFC’s highest ever disbursements of Rs. 64,400 crores in FY 2017-18 and

Highest ever sanctions of Rs. 1,16,000 crores

 

• Disbursements saw significant jump in area of Renewables & Refinancing

o   Renewable business saw 260% growth (from Rs 2,500 crores to 9,000 crores)

Some of the significant Renewable deals:

• 5 wind projects of IL&FS – Rs 2,500 crores
• ACME 3 Solar projects –  Rs 950 crores
• Mytra Wind – Rs 750 crores

 o   Refinancing business saw 100% growth (from Rs 6,900 crores to Rs 13,750 crores)

Some of the significant refinancing deals were

• NTPC Meja – Rs 3,700 crores (Replaced 16 Banks)
• Raichur Yermarus TPS –   Rs 1,700 crores (Replaced 7 Banks)

 

• New areas of Funding

o   First time ventured into Irrigation Schemes: Funded Electro & Hydro mechanical components of irrigation schemes of Telangana – Sanctioned Rs.12,000 crores and Disbursed Rs.2,000 crores (backed by State Government Guarantee) 

o   First waste to energy Project by PFC – Sanctioned & Disbursed Rs.290 crores to Ramky Group 

• Also sanctioned 15 MW WTE project in Ahmedabad (Good Watts Energy) ­­

 

Other areas that we are exploring to diversify loan portfolio includes funding

 

• Electro & Hydro mechanical components related to Lift irrigation / Sewage treatment plants / Smart Cities
• Gas / LNG / coal mining
• Railway electrification
• Funding Smart Cities Infrastructure
• E-Vehicle Manufacturing Units (including Charging Stations)
• Electric charging infrastructure for promoting e-vehicles
• Battery manufacturing units for solar projects
• Mini / Micro grids for distributed generation
• Energy Efficiency Systems like Cogeneration / Tri-generation / combined heat & power
• Waste heat recovery systems

 

2. Diversification in Borrowings & Efforts undertaken for reduction in cost of funds

Funds Mobilized during FY 2017-18 – Approx. Rs. 78,000 crores

• Raised highest ever foreign currency loans of ~ US$1.7billion in a year

o   First time tapped Green Bonds of US$ 400 Million – Achieved tightest pricing

o   Raised US$ 800 million syndicated loans in a year

o   Raised FCNR B loans of US$ 460 million

• Highest ever refinancing of existing ECBs of US$1.1billion to reduce cost

o   US$ 450 million already done – Savings Rs 60 – 70 crores

o   US$ 250 million already done (effective from June, 2018) – Savings Rs.17 crores

o   US$ 400 million is underway for refinancing

• Structured deal for 10 year paper with LIC for Rs. 5,000 crores – Raised at a very competitive rate   

 As result, Average cost of funds reduced by 23 bps (i.e. from 8.41% to 8.18%)

1. Asset quality

            Total Loan Assets: Rs. 2.79 Lakh crores

 

 

Therefore 89% of our total asset book is not having any kind of stress

Out of the Stressed Projects 

• 55% are commissioned(i.e. 10 GW out of stressed capacity of 18.4 GW)
• ~ 50% has coal linkage / FSA 

 Resolution process

• Four projects are in advanced stage of resolution amounting to Rs. 4,300 crores, where we don’t expect major haircut 

o   DANs & Shiga projects in Sikkim signed PPAs & should be out of stress

o   GVK Ratle – Borrower agreed for One Time Settlement

o   South East – talks are in advanced stage with UP for takeover

 

• 4 projects are under bidding for change of management (i.e Rs. 6,300 crores)

Market response is good as the players participating are reputed

o   GMR Chhattisgarh – 5 Bidders submitted Non-Binding offers (NLC, Adani, Vedanta, Torrent, JSW) – Last date of submission of final bids 11 June, 2018

o   KSK Mahanadi – 15 EoIs received, 13 qualified & RFP to be issued shortly

(Qualified Bidders: Adani, Hinduja, JSW, Resurgent, Torrent, Edelweiss, India Resurgence, L&T, SSG Capital (Singapore), Vedanta, Lone Star Fund, Merrill Lynch, NIIF)

o   Jhabua Power – 18 EoIs received, finalizing evaluation criteria  to float RFP

(Adani, Bank of America Merrill Lynch, Bhilwara Energy, Edelweiss, Hindustan Thermal Power, JM Financial, Ind RF, JSW, KKR (Fund), Lonestar-IL&FS, Resurgent Power, SC Lowy, Torrent, Vedanta, Varde Partners, SSG Asia, World Window EXIM, NIIF) 

o   Essar Mahan – EoIs to be floated shortly

• 9 Projects are being resolved through NCLT route (i.e Rs. 8,100 crores)  
• Rattan India Nasik (i.e Rs 3,000 crores) – talks are on with Government of Maharashtra
• Resolution plan under finalization for 6 projects (i.e. Rs. 8,700 crores) 

o   RKM Powergen – Under restructuring, terms to be finalized in Jun, 2018

o   Rattan Amarvati – Under restructuring

o   Resolution Plan underway : Essar Transmission, India Power Haldia, RS India and Astonfield

Reversals likely in FY 2018-19

Government Sector

• Rs. 4,600 crores Government NPAs will get an upgrade – Reversal is Rs. 230 crores
• Rs.12,000 crores Government Restructured Assets to upgrade – Reversal is Rs.600 crores

 

1. Sectoral developments

 Govt. of India has launched various initiatives for resolving power sector issues

Improvement in operational and financial performance is visible

 UDAY

Target by March, 2019                      Current Status

AT&C Losses                        15%                                                     19.87%

ACS-ARR GAP                    0.23                                                     Zero

Power Supply                        19.9 Hours                              24×7 Power for All

 

IPDS / R-APDRP 

• 1,396 towns are IT enabled now – to improve billing / collection efficiency

o   33% revenue collection is digital now (April, 2018)

• 34,000 urban feeders connected to National Power Portal – Online data available for 31,667 urban feeders to monitor AT&C losses  online
• Common Compliant (including Theft Reporting) No ‘1912’ operational in all utilities

DDUGJY

• Led to 100% village electrification – to result in higher demand for power

Saubhagya

• Expected to increase power demand by ~28,000 MW

SHAKTI (Scheme to Harness & Allocate Koyla Transparently in India)

• Scheme introduced to alleviate stress in generating utilities
• 10 bidders with capacity of 9,000 MW participated in auction

o   KSK Mahanadi project of PFC got benefitted from this

o   Other bidders also started getting coal

Mid Term PPA Scheme

• To purchase 2,500 MW for 3 yrs from commissioned projects with no PPA
• Bidding likely to conclude by mid-July, 2018
• Will help projects sell power on a consistent basis

 Features

1. Procurement will be done through DEEP E-Bidding Portal.
2. Two part tariff, where
3.          Fixed Charge fixed at Rs.0.01/kWh & specified in the Bidding Document &
4.          Variable Charge shall be quoted by the Bidders

iii.           Single entity can be allotted maximum capacity of 600 MW (min lots of 100MW)

1. Assures a minimum off-take of 55 per cent of contracted capacity
2. The Tariff will be fixed for three years without any escalation

Status

1. Pre-bid meeting was held in second week of May 2018
2. RFQ is expected to be opened on 12 June 2018

iii.                Tentative time for signing of PPA is Mid July, 2018.