NTPC out of power fund

National Thermal Power Corporation (NTPC) will not be contributing to the Rs 1,000 crore India Power Fund (IPF), a venture capital fund for the power sector, proposed to be set up by the Power Finance Corporation (PFC).

"We will not be able to contribute to the fund because the department of public enterprises guidelines do not permit public sector enterprises to invest surplus funds in risky instruments," said an NTPC executive.

He said since the power fund is envisaged as an equity fund, it would be a 'risky' investment for public sector units as returns were not assured.

Both the power ministry and the Power Finance Corporation were in favour of NTPC contributing to the fund, which was envisaged as a Rs 1,000 crore fund to meet the shortfall in equity requirements in the power sector.

The ability of the existing utilities to raise resources for meeting the required equity investment is limited by the tariff policies adopted by various regulatory commissions. A significant contribution will, therefore, have to come by way of fresh investments from private promoters.

According to estimates, there is likely to be a shortfall of nearly Rs 70,000 crore with respect to the total equity requirement for implementing the ambitious capacity addition target of 100,000 megawatt by 2012.