Hydel projects like Karcham Wangtoo, Koteshwar and Kemang are expected to see tariffs fall by about 20-25 paise per unit with Power Finance Corporation(PFC) increasing the loan repayment period for such projects from 15 years to 20. |
"The repayment period for transmission projects has also been increased from the existing 12 years to 15 after the usual moratorium period," said a PFC executive. |
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"We are progressively moving in the direction of increasing the repayment period to the entire codal life of plants," he added. The codal life is the period over which a product can be depreciated. Companies, however, usually undertake advance depreciation to avail of tax benefits. |
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For instance, combined cycle plants have a life of 15 years, coal-fired plants have a 25-year life, transmission projects have a 35-year life and hydel projects have a depreciation life of 50 years. |
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So, over a period of time, PFC proposes to increase the repayment period for various projects in line with their depreciation period. |
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PFC executive said increased tenure of repayment period to 20 years in case of hydel projects would increase the loan tenure effectively to 24-26 years, which could reduce the tariff for hydel projects financed by the corporation by about 20-25 paise per kWh. Projects with a greater loan component are expected to benefit more from this move. |
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Among the major hydel projects funded by the PFC are the Jaypee groups Karcham Wangtoo, a 1000 MW project in Himachal Pradesh, Tehri Hydro Development Corporation's Koteshwar 400 MW project in Uttar Pradesh and North Eastern Electric Power Corporation's 600 MW Kemang project in Arunachal Pradesh. |
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In case of transmission projects, the decision to increase the repayment period was taken in response to a proposal by NEEPCO, which is developing an associated transmission project along with Kemang. The benefit will also be available to other transmission projects, said PFC executives. |
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