IIFC in Rs 35000cr power tie-up

The newly formed India Infrastructure Finance Company has joined hands with Infrastructure Leasing and Financial Services to develop and finance 10,000 MW of power generation and transmission, entailing an investment of upto Rs 35,000 crore (Rs 350 billion).

"We have tied up with IIFCL for development and implementation of five identified power projects and three in pipeline, agggragating 10,000 MW of power generation and transmission," IL&FS chairman Ravi Parthasarathy said.

Parthasarathy said the total investment required for development, power evacuation and fuel linkages for these
projects could be in the range of Rs 34,000 to Rs 35,000 crore (Rs 340 to Rs 350 billion) over a period of 2 to 3 years.

The projects identified are -- Oil and Natural Gas Corporation's 1100 MW gas-based power project in Tripura (Rs 3,500 crore/Rs 35 billion), 630 km transmission linkage for this project from Tripura to Bongaigaon (Rs 2,000 crore or Rs 20 billion), 1500 MW Tiesta-3 hydro power project in Sikkim (Rs 5,500 crore or Rs 55 billion), 2000 MW gas-based power project in Andhra Pradesh (Rs 6,000 crore or Rs 60 billion) and 1600 MW Krishnapatnam
imported coal project (Rs 5,500 crore or Rs 55 billion).

Three other projects in pipeline, in Rajasthan, Orissa and Jharkhand, would generate 3,600 MW power with an
investment of about Rs 10,000 crore (Rs 100 billion).

IIFCL, which was formed earlier this month by government following announcement in the Budget, will be the lead fund
arranger for these projects.

"We will invest 20 per cent of the total cost of these projects (about Rs 7,000 crore or Rs 70 billion) by way of both equity and debt," IIFCL chairman S S Kohli said.

Kohli said the rest of the fund will be mobilised through syndicated loans from banks and financial institutions and
credit lines from multilateral agencies like World Bank and Asian Development Bank, KfC and JBIC.

IL&FS, which has extertise in infrastructure project development, is conceiving the projects to be developed
through Public-Private-Partnership model and would also take equity stake in the projects besides providing debt.

Parthasarathy said the long-term loans would have a tenure of 20 years with five years moratorium period
available.

The equity-debt ratio would be 1:1.5 for the Rs 35,000-crore total investment planned for these projects.

The investors will put Rs 14,000 crore (Rs 140 billion) through equity particiaption and Rs 21,000 crore (Rs 210 billion) in debt.

Lenders like Punjab National Bank are expected to participate in these infrastructure projects.

To reduce the risks significantly, IL&FS would complete the project development activities before the private sector
entities are selected for project implementation.

Besides providing long-term fund to projects directly, IIFCL would also give re-finance to banks and financial
institutions for tenors exceeding 10 years.

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