PFC to Fund Projects Worth Rs 22,000 Crore in Madhya Pradesh

PFC has announced that it will fund 225 MW hydroelectric and other multiple purpose projects worth Rs 22,000 crore in Madhya Pradesh.

State-owned power sector financing institution, the Power Finance Corporation (PFC) has announced that it will fund 225 MW hydroelectric and other multiple purpose projects worth Rs 22,000 crore in Madhya Pradesh.

“PFC entered into an agreement with Narmada Basin Projects Company Ltd (NBPCL), a wholly-owned company of Govt of Madhya Pradesh, to fund projects worth Rs 22,000 crore for 225 MW hydroelectric projects & multipurpose projects in the State of Madhya Pradesh,” the company issued in a statement.

The MoU for the projects was signed during a virtual meeting by Rajeev Sharma, CMD, PFC and I C P Keshari, Managing Director, NBPCL. According to the statement, the funds will be deployed by NBPCL for setting up hydroelectric projects of 225 MW and power components of 12 major multipurpose projects in Madhya Pradesh.

The Madhya Pradesh government has conducted the pre-feasibility study of these projects and has provided approval for their execution.

The MoU will help PFC to actively partner with NBPCL and provide finance for hydro-electric plants totalling 225 MW along with power components of multipurpose projects as part of the state government’s endeavour to implement twelve major multipurpose projects. Some of the major projects that will be financed under the MoU include Basaniya Multipurpose Project Dindori, Chinki Boras Multipurpose Project Narsinghpur Raisen Hoshangabad, Sakkar Pench Link Narsinghpur Chhindwara, and Dudhi Project Chhindwara Hoshangabad.

The disbursal of the funding will be linked to the execution of the projects, according to the PFC statement. And, it will consider the financial assistance to NBPCL based on due diligence and on mutually acceptable terms, it added.

Recently, the IEEFA had suggested in its new findings that instead of backing obsolete & uneconomical coal-fired power plants that could soon become stranded assets, state-owned power sector lender, PFC should lend more to support renewable energy capacity addition.

IEEFA in its report titled “India’s Power Finance Corporation continues to fund non-performing coal assets” said that, though, PFC and REC both have materially increased their lending to the renewable energy sector, in line with the government’s long-term power sector objectives. However, in FY2018-19, PFC lent USD 1.2 billion to renewable energy projects, which is only capturing less than one-tenth of the market for renewable lending.

Both Power Finance Corporation (PFC) and Rural Electric Corporation (REC) are mainly responsible for providing financial support for the country’s power sector.

Earlier this month, it was announced that PFC/REC will infuse liquidity of Rs 90,000 crore to Discoms against their receivables as part of the Rs 20 trillion stimulus package that was announced by the Prime Minister. These loans are to be given against State guarantees for the exclusive purpose of discharging liabilities of Discoms to Gencos, which currently stand at over Rs 94,000 crore.