The Power Finance Corporation (PFC) has announced that it has raised $300 million through a three-year syndicated loan from the State Bank of India, Honk Kong and MUFG Bank, Singapore.
In a BSE filing, the company has mentioned that this is its second foreign currency borrowing in the current quarter.
PFC, a government of India-owned non-banking financial company that funds power sector projects, has mobilized around $1.3 billion since its acquisition of the Rural Electrification Corporation (REC) earlier this year. The company had earlier raised $1 billion from overseas bond issuance.
In February 2019, the Competition Commission of India had approved PFC’s acquisition of a 52% stake in the REC. In December 2018, the acquisition received in-principle approval from the Cabinet Committee on Economic Affairs (CCEA).
For FY 19, PFC reported that it had assets of over ₹3.07 trillion ($44.6 billion), and revenue of ₹27 billion ($3.92 billion). It is important to note here that most non-banking financial institutions have been wreathing under stress due to the IL&FS crisis since September last year.
In June 2017, Mercom reported that PFC was planning to shift its investments away from conventional energy and towards renewable energy projects, last-mile transmission, and distribution projects in addition to making existing thermal units more energy efficient and refinancing of old projects. Earlier this year, the PFC approved financial aid of ₹13.5 billion (~$212 million) to Bihar for a transmission line project.
The company was further planning to finance power transmission projects awarded to private transmission project developers, through tariff-based competitive bidding.
It is interesting to note that in March 2019, Power Minister R.K. Singh directed REC and PFC to not grant loans to distribution companies which are making heavy losses (above 15%) unless they chalk out a plan to reduce them. The minister had noted that many DISCOMs were making heavy transmission and distribution (T&D) losses and it may be difficult for them to repay the loans.
Shaurya is a staff reporter at MercomIndia.com with experience working in the Indian solar energy industry for the past four years in various roles. Prior to joining Mercom, Shaurya worked with a renewable energy developer and a consulting company. Shaurya holds a Bachelors Degree in Business Management from Lancaster University in the United Kingdom.