To make quick flow of funds available to developers, financial institutions will like sale of power to be tied up with power purchase agreements (PPA), covering the full tenure of the loan so that it not only ensures full repayment of debt to lenders but also to facilitate availability of cheaper power to consumers.

Financial institutions will evaluate projects on the basis of tariffs of the project and ability of the developer to bring in the required equity and technical expertise for completing the project on time.

The power ministry has issued new guidelines in this regard and sought suggestions from the concerned parties.

Apart from this, the state-run Power Finance Corporation has developed special schemes for funding hydro projects with tenures of up to 25 years to address the issue of back ending of tariff. A special requirement of hydel projects is the availability of long term funding at reasonable interest rates for back ending of tariffs so that the cost of power during the initial years is reasonable.

In order to give further comfort to private developers, the ministry envisages involvement of Power Grid Corporation, a central transmission utility, for evacuation of power from large projects involving inter state sale of power.

India is endowed with a large economically exploitable hydro potential assessed at 84,000 MW at 60 per cent load factor equivalent to a probable installed capacity of 1,47,700 MW.

Also see:

Government plans mega power projects (10-Nov-05)