Earmark payouts for power fund: PFC

The Power Finance Corporation (PFC) has submitted a proposal to the government urging it to earmark up to 50 per cent of the dividend received from public sector power companies for the India Power Fund (IPF).

The fund, set up through an initial contribution of Rs 200 crore from PFC, was launched earlier this year.

"We have proposed to the power ministry that around 40-50 per cent of dividends from central PSUs be ploughed into the IPF," PFC Chairman and Managing Director AA Khan said here, while announcing the financial results of the corporation.

The India Power Fund is targeting to raise around Rs 7,000 crore over the next 8-9 years to supplement the last mile equity requirement in power projects. The roadshows for raising the corpus will be kicked off from April 5 in Delhi.

The roadshows would first attract central public sector utilities to the fund, after which multilateral and other funding agencies, including the Asian Development Bank and the World Bank, would be approached, Khan said.

Two separate companies, an asset management company and a trustee company, are being floated to manage the fund. The company also announced a 37 per cent jump in its net profit at Rs 1,601 crore during 2003-04, and said it was exploring plans for converting into a universal bank.

PFC had also proposed an initial public offering, which was being considered by the government, Khan said. PFC's net profit rose Rs 429 crore during the year from Rs 1,172 crore last fiscal.

The jump has largely been due to the adoption of new accrual-based accounting norms, without which profits would have been lower by Rs 300 crore.

The corporation switched to calculating its income on accrual basis from cash basis from April 2003. Profits also rose because of the increase in its income by 20 per cent.

Khan said disbursements climbed 22 per cent to Rs 8,974 crore, up from Rs 7,338 crore in the last financial year. Sanctions went up 17.8 per cent to Rs 16,472 crore, compared with Rs 14,001 crore in the last year, while recovery rate remained flat at 99 per cent.

The corporation also increased its market borrowings to Rs 8,147 crore from Rs 7,002 crore.

The company plans to diversify into financing rural electrification projects and renewable sources of energy, including wind farms and biomass, apart from financing schemes with backward and forward linkages with power projects.