PFC looking at equity funding of nuke projects

Power Finance Corporation (PFC), the biggest lender in the power sector, is open to the possibility of equity participation in upcoming nuclear projects in the country.

PFC has held initial discussions with the Nuclear Power Corporation of India Ltd (NPCIL) on funding possibilities, where the state-owned lender has offered to provide debt financing and consultancy services to start with, and explore the possibility of equity participation in due course.

Amid emerging opportunities in the nuclear power sector, NPCIL has indicated to lending institutions that it might need upwards of Rs 1,00,000 crore over the next 5-10 years for funding its aggressive plan to scale-up capacity, executives involved in the exercise said. PFC is keen on tapping all possible funding opportunities, including equity financing in the long run, they said.

Capacity expansion plans

NPCIL plans to have a capacity of 20,000 MWe (mega watt electric) on stream by 2020 and 63,000 MWe by 2032. Currently, it operates 19 nuclear power reactors with an installed capacity of 4,560 MWe, while three of its reactors with a total capacity of 2,220 MWe are in advanced stages of completion.

In addition, four indigenously designed 700 MWe pressurised heavy water reactors, two each at Kakrapar in Gujarat and Rawatbhata in Rajasthan, have been launched for construction last year. NPCIL's installed capacity is expected to go up to 9,580 MWe by 2017, with the progressive completion of the nuclear power reactors under construction. It is also working on plans to set up imported light water reactor-based projects at a number of coastal locations.

Financial resources

The nuclear power major — which has a surplus of Rs 12,000 crore, including cash reserves — can manage only to set up about 10,000 MWe through its own financial resources.

Hence, funding from other sources is needed to supplement NPCIL's efforts, especially in the wake of the extensive funding requirement envisaged for the imported LWR-based project on the anvil. PFC had in October last signed an initial agreement with NPCIL for providing financial assistance for new nuclear projects and for refurbishment of existing atomic power stations.

PFC's asset base, cumulative loan sanctions and disbursements as on June 30, 2010, stood at Rs 85,597 crore, Rs 2,88,932 crore and Rs 1,47,056 crore, respectively.