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PFC was established in July 1986 as a Development Public Financial Institution
(PFI) under
Section 4A of the Companies Act, 1956. It is dedicated to the Power Sector. It is
a wholly
owned by Government of India. A Nav-Ratna public Sector Undertaking. It ha s
highest safety
ratings from domestic and international credit rating agencies and also ISO
9001-2000
Certification for the Project Appraisal System.
PFC provides financial assistance to all types of power projects like Generation,
R&M,
Transmission, Distribution, system improvement, etc. PFC encourages optimal
growth and
balance development of all segments of power sector through assigning
priorities for
financing different categories of projects. The state sector utilities are the main
beneficiary of
PFC¶s financial assistance. PFC has also been funding private sector projects for
last 5-6
years.
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PFC's mission is to excel as a pivotal developmental financial institution in the
power sector
committed to the integrated development of the power and associated sectors by
channeling
the resources and providing financial, technological and managerial services for
ensuring the
development of economic, reliable and efficient systems and institutions.
Received awards
from Hon'ble President, Hon'ble Vice President & Hon'ble Prime Minister for
being in the
top ten Public Sector Undertakings of Government of India.
*Consistently rated µExcellent¶ for its overall performance against the targets set
in
Memorandum of Understanding (MoU) by the Government of India (GoI) since
1993-94.
*~
  Public Sector Undertaking.
*Ranked among the top 10 PSUs for the last four years.
*Employee profit stands at Rs.3.9 crores per head.
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Placed at Sovereign Rating by International Rating Agencies - Moody¶s and
Standard &
Poor¶s for long term foreign currency debt.
Placed at the highest safety ratings by accredited rating agencies in India -
CRISIL and ICRA
Domestic borrowings include term loans and bonds; External borrowings take
the form of
Syndicated Loans, Fixed & Floating Notes.
Consistently rated µExcellent¶ by the Government of India (GOI) for overall
performance
against the targets set in Memorandum of Understanding (MoU) between GOI
and PFC.
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PFC in its present role has the following main
To rise the resources from international and domestic sources at the competitive
rates and
terms and conditions and on-ward lend these funds on optimum basis to the
power projects in
India.
To act as catalyst to bring institutional, managerial, operational
And functioning of the state power utilities
To assist state power sector in carrying out reforms and to support the state
power sector
during transitional period of reforms
?
 
   
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objective $: -
operational and financial improvement in "--.
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i. State Electricity Boards
ii. State Power Utilities
iii. State Electricity/Power Departments
iv. Other State Departments (like irrigation Department) engaged in the
development of
power projects
v. Central Power Utilities
vi. Joint Sector Power Utilities and Co-operative Societies
vii. Municipal Bodies
viii. Private Sector Power Utilities

'&1$c '& c ,c !&$# # c c 2!&0c The essential steps to be taken for
designing a
financial model for any infrastructure project financing through private
participation are
as follow:

 Determining the scope of the project and the related EPC cost.
cDetermining other expenditure such as Development expense, Preliminary &
Preoperative expenses, financial costs, etc.
ccDetermine the total Cost of the project with interest during construction.
ccAssessment of tariff in order to determine revenue potential for the project.
ccDetermine O&M cost through the concession period.
ccCalculating the fixed and variable cost relating to the project.
ccFinancial analysis to determine the most efficient means of financing.

"c1$&c !c $&$c ,c ,#  #0c 2!&0c The financial model provide a basic
analysis,
usually based on relatively raw, preliminary data and simplified financing
assumptions, to
establish weather a given project is worth pursuing further. The required
output may be:
ccBasic Project IRR
ccDebt service Coverage Ratios and other debt ratios.
ccEstablishing a financial structure that is sustainable by the project.
cReassuring lenders and investors as to the attractiveness of the deal as a home
for
their funds.
cAn indication of tariff levels required for achieving appropriate returns.
Preparation of sensitivity analysis.

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The site was selected considering the followings:

'c The location is not in environmentally fragile area. The closest airport is
about
150 kms far from site thus reducing any flight hazard because of
chimney
height
'c Near round availability of water from the perennial river which is located
about 20 km from the site.
'c The site is well connected to coal mines, Port and Airport by Railways
and by
State/National Highways.
 !
Main Power Plant 65
Ash Dyke 70
Water Reservoir 40
Railway Siding 30
Housing Colony 50
Green Belt 50

 +# 2& '0c$1&'$

Some features of the Project addressing the environmental concerns are as
follows.
An efficient electrostatic precipitator is proposed that would keep the stack
emission of particulate within limits.
The stack height of 275 m is proposed to limit the ground level concentration
of pollutants (SOx, NOx etc).
Adequate silencing equipments would be provided to attenuate the noise to
acceptable level.
 Adequate green belt would be developed in and around the Project area and
the
ash disposal area satisfying the requirement of State as well as Central
Pollution Control Board.
'0c&4#&2& '$c%-/

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 $
c '#'6c0##)#0#'6c#'&#c While considering the eligibility of an entity, last
two year
Auditor¶s report and notes to annual accounts along with Income tax as sessment
order for
last three years be also examined. Type of securities and mode of repayments is
also to be
suggested by the help of entity rating.

"c
'''6c0& &$c All statutory clearances requires at Central/State level
for the
implementation of the project are to be ensured. Depending on the cost of
project, techno
economic clearances of CEA/SEB may be asked.
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1. Land Acquisition
2. Water Availability
3. Stack Height: Airport Authority of India
4. Forest Clearance: Such that no sanctuary, reserve, national park within the
project
5. No defense establishment
6. Ministry of environment and Forest
7. Fuel Supply Arrangement/Agreement through various coal linkages
8. Fuel Transportation Arrangement
9. PPA for selling Electricity
10. Transmission agreement with Transmission agency
11. Pollution Control Board
c
%c $'c $'#2'&c The base date for estimation of cost shall not be more than
six month old
at the time of talking up the project for appraisal. Physical contingencies shall
be limited
to 3% of the base cost and the price contingencies provision of 7%, 12%, 16%,
19% and
22% shall be made depending on the project completion period of 1,2,3,4 and 5
years as
per PFC guidelines. Also IDC, to be considered to arrive at project cost.
c
(c *&'c $' & &,#'c  06$#$c Calculate FIRR and EIRR. Techno-
economically sound
with FIRR and EIRR not less than 12%. Sensitivity analysis is also done.
c
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'&'&!c 1*&'c '# c The project is evaluated on various parameters
and then
ranked according to the PFC guidelines.
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The cost of the Project estimated at Rs. 7091 Crore is proposed to be financed
with senior
Debt and equity in ratio of 75:25. The proposed components of financing are as
under. Equity
is broken into a ratio of equity to sub -debt as 80:20.

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- Equity Capital 1418.37 20%

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Ú Loan 354.59 5%

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- Rupee Term Loans 5318.89 75%
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The total Project cost of the Project envisaging setting up a 1320 MW power
plant using
super critical technology on a turnkey EPC contract basis is estimated at Rs.
7091 Crore.
Based on the total Project cost of Rs. 7091 Crore, including transmission lines
and mining
cost, the per MW cost of the Project works out to Rs. 5.37 Crore. If we exclude
the cost of
transmission line & mining and corresponding IDC, the Project Cost reduces to
Rs. 5308
Crore and the per MW cost of the Project works out to be Rs. 4.02 Crore.
It may be observed that the cost per MW of the Project is competitive even with
other thermal
power projects being developed using sub critical technology.

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