PFC Expects Additional Rs 35K Cr for Enhanced Discoms Funding

Budget reactions

PFC has said that it expects additional funding requirements of Rs 35000 crore to meet the obligation for enhanced funding for power Discoms in near future.

The Power Finance Corporation (PFC) has said that it expects additional funding requirements in a range between Rs 30,000 crore and Rs 35,000 crore to meet the obligation for enhanced funding for power Discoms in near future.

The government had recently allowed enhanced funding to Discoms for clearance of their outstanding dues as on June 30, 2020. “The lending for the enhanced portion will be co-funded by PFC and its subsidiary REC equally. We expect that in near future additional fund requirement would be around Rs30,000 cr to Rs 35,000 cr,” PFC issued in a regulatory filing.

The company said it is adequately placed on the liquidity front in the current financial year and is raising around Rs 58,000 crore from the domestic markets at competitive rates including Rs 11,000 crore for the liquidity injection package.

“Also, more than 70 percent of the debt obligation requirement has already been met for the financial year. Considering PFC’s high creditworthiness and availability of diversified funding avenues like bond ETF, foreign markets, we believe PFC would be able to comfortably mobilise these resources from the market,” it said.

As reported by PTI, the company added it also expects the government to provide support for this scheme as the government has always extended its support for implementing power sector schemes.

The statement came as a clarification in response to media reports stating PFC is planning to launch a Follow on Public Offer (FPO) and is also considering a buyback of its infrastructure bonds.

“It is clarified that PFC is not planning to launch any such FPO in the near future. Also, it is highlighted that as of 30 June 2020, PFC’s Capital Adequacy Ratio is at 17.32 percent with Tier I capital of 13.11 percent. Thus, we have sufficient cushion available over the regulatory limit of 15 percent,” it said.

PFC also clarified that it has not introduced any new buyback or exit option nor has it appointed any agency to offer such buyback or exit option on its bond issuance including Infrastructure Bonds. Hence, the buyback or exit option as per the existing terms and conditions of the bonds issue will continue to be available to the investors.