PFC may issue tax-free bonds to raise Rs 50 billion in the current financial year to finance lending to power projects

Indian state-run power projects financier Power Finance Corporation Ltd may raise Rs 50 billion via tax-free bonds in the current financial year 2011-12 to fund lending to power projects, a senior Power Ministry official told media Tuesday.

"We are awaiting the Ministry of Finance's nod to allow Power Finance Corp to raise Rs 50 billion through tax-free bonds in the current fiscal," the official said.

The Finance Ministry is expected to reply in a day or two, the official added.The fund raising will help the company reduce its interest costs -- the interest at which PFC borrows from the market for further lending – by 1.5%, the official said.Power Finance, which finances power generation and transmission projects, has set a target to borrow Rs 300 billion in this fiscal.