THE US energy major Enron may be on the winding-up mode, thereby dampening the sentiment in the power sector. But home grown Tata Electric Companies (TEC) proposes to pump in Rs 500 crore for acquisitions, renovations and modernisation of the existing
capacities.
TEC seeks to mobilise these funds from the state-owned Power Finance Corporation (PFC) in the form of term loans. According to sources, Ratan Tata had a meeting with PFC chief K.K. Govil earlier last week in this regard.
Sources added that PFC has agreed "in principle" to participate in TEC's acquisition plans. However, a formal agreement is expected to be concluded only after the detailed proposal is made by Tata group later next week.
Neither Ratan Tata nor TEC chief Adi Engineer have identified any specific company or project for takeover. Senior PFC officials, however, said "Tata group has sought a term loan and we have given them a commitment of Rs 500 crore. A part of the loan could
be used for acquisitions whereas the rest could be used to renovate the existing projects."
Depending upon the type of project, the loan could be provided for 13-15 years. "Typically, a triple A rated company like Tatas gets the most favoured rates of interest and the moratorium on payment of the principal is till six months after commissioning
of the project," explained a senior PFC official. The interest rate too would be worked out based on project parameters.
PFC itself is likely to raise these finances through its usual options of private placement or may approach the debt market. PFC, this year, had sanctioned Rs 533.68 crores for a 500 MW Reliance Power's project in Gujarat. Maheshwar Hydel Power Project in
Madhya Pradesh also received sanctions for an amount of Rs 623.22 crore from the PFC.
While PFC is upbeat about the latest Tatas request, the past experience is not very encouraging in terms of supporting the private power ventures. Due to large number of bottlenecks snagging the power projects in private sector, most of them failed to take
off thereby PFC's sanctions remained on paper.
