MK Goel, Chairman and Managing Director, Power Finance Corporation
How has PFC been impacted due to the cancellation of coal blocks?
Due to cancellation of coal blocks, there are a total of 16 projects with an exposure of Rs 36,237 crore which were affected. Out of these 16 projects, 12 projects belonged to the government sector with an exposure of roughly Rs 32,000 crore. As per the ordinance, State and Central sector utilities will get direct allocation and do not have to go through the process of e-auction. Hence, we do not see any issue with the projects belonging to the government sector.
And what about the other four projects that PFC has funded?
And for the balance four projects which are belonging to the private sector, all the four projects are yet to be commissioned. Hence, there is no immediate impact. Out of the four affected projects, two projects are having a tapering linkage in place, which is expected to be converted into a long-term linkage in case of any issue and these projects are RKM Powergen having total exposure of Rs 2,595 crore. Another is KSK Mahanadi where the exposure is Rs 1,685 crore, however, for this 50 per cent tapering linkage is already available, hence only 50 per cent of exposure is being considered affected, that is, Rs 842 crore.
The other two projects that do not have tapering linkage and are affected are Essar Power MP with an exposure of Rs 975 crore which is shortly to be commissioned and for which we are taking up with the government for providing alternative fuel arrangements as this project is likely to be commissioned shortly. Another project is Jas Infra with a small exposure of Rs 224 crore which is yet to be commissioned.
Can you take us through your disbursement and loan sanctioned figures for FY15?
We have sanctioned loans worth Rs 23,000 crore approximately during Q2 FY15. Cumulatively, we have sanctioned Rs 33,000 crore (approximately) during H1 FY2015 against the target of Rs 55,000 crore, i.e., 60 per cent of the target has already been achieved. Sanctions during Q2 FY15 have increased by 88 per cent to Rs 22,673 crore from Rs 12,050 crore and sanctions during H1 FY15 have increased by 19 per cent to Rs 32,748 crore from Rs 27,425 crore.
As regards disbursements for Q2 FY15, we have disbursed Rs 8,361 crore.
Cumulatively, we have disbursed Rs 16,650 crore during H1 FY15 against the target of Rs 44,000 crore which is 38 per cent of the target achieved.
Correspondingly, during H1 FY14, we had disbursed Rs 18,012 crore which was also 38 per cent of the target during that year. Therefore, we are hopeful of achieving our target. Further, we have outstanding loan sanctions of Rs 1.65 lakh crore, which is 3.5 times of the disbursement during FY14. This indicates our strong business pipeline, going forward.
What are your thought processes on the Coal Ordinance?
Ordinance on the coal front last week is a landmark step in the right direction to address the long pending coal issue. I am therefore optimistic on the power sector given that the government is taking up several initiatives to address sectoral issues. As you are aware, the uncertainty created by the cancellation of coal blocks came to an end last week by the government passing an ordinance. The main features of the ordinance addressing cancelled coal block issues are that the government is to directly allot coal mines to State and Central PSUs and the government is to facilitate e-auction of cancelled coal blocks to end-user private players.
Other positives of the ordinance, I believe, are that it is a much-awaited positive move by the government to give a fillip to reforms in the coal sector. It is the first step towards liberalisation of the coal sector whereby commercial mining is being enabled through a specific provision. It is therefore likely to promote competition in the coal sector.