REC, PFC to mop up funds to bridge power gap

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MUMBAI, Sep 24 (UNI) Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) have been mandated by the Government to mobilize funds to ensure that viable projects do not suffer for want of funds as the Government has drawn up plans to bridge the yawning demand-supply gap in the power sector.

The Working Group on Power for the Eleventh Plan (2007-12), based on government power policy, has been estimated to have a total fund requirement of about Rs 10,31,600 crore for the power sector as a whole.

Power Industry sources told UNI that the working group has assessed that the fund requirement for creation of projected capacity expansion will be about Rs 4,10,900 crore. The Government has already set up an inter-institutional group with leading FIs and banks to facilitate financial closure in respect of private sector projects.

The Government's Eleventh Plan (2008-2012) anticipates a substantial increase in the country's power capacity. The Ministry of Power's data shows that India's power generation system, as on March 31, 2007, had a total installed capacity of 132,330 MW and an additional 78,577 MW are required to meet the projected demand during the plan period. Thus, the overall fund requirement by 2012 for the sector has been estimated at a whopping Rs 10,316,000 million.

As much as half of the capacity addition is expected to be contributed by the Centre, while the States' contribution is about 35.6 per cent. A 10,760 MW addition (13.7 per cent) is expected to come from the private sector.

Sources said that although power generation capacity in the country has increased substantially in recent years, it has not generally kept pace with the growth in demand or the growth of the economy. According to CEA, India's total energy shortage during fiscal 2007 was 68,341 million units (9.9 per cent of its total requirements) and peak hour shortage was 13,610 million units (13.5 per cent of demand).

According to the Planning Commission, the Indian economy has grown at an average of 8 per cent for the past three years. The Eleventh Plan targets an average growth rate of 9 per cent. Data from the Ministry of Power shows that India will have to increase its primary energy supply by three to four times and electricity generation capacity by about six times if it were to meet the growing economy's needs over the next 25 years.

While PFC went public early this year mopping up close to Rs 1,000 crore, REC has now geared itself up to tap the capital markets to raise funds for augmenting its capital base to meet the future capital requirements. REC, which proposes to enter the capital markets with an IPO of 156,120,000 and Equity shares of Rs 10 each through a 100 per cent Book building process, has already filed its Draft with SEBI.

UNI

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