Mountains of Concrete - International Rivers

some bilateral institutions are expectedto continue their supportfor hydropower in India, thoughtheir involvement will be relativelysmall. However, they couldstill play a “beacon role”; while thecontribution of their own fundswould be relatively small, their involvementor approval would bea signal for many of the other financingagencies, especially internationalagencies, to provide fundsto these projects.An indication of the contributionsfrom different sources isgiven by the estimates of funds requiredand available for the powersector in the report of the IndianMinistry of Power’s WorkingGroup on Power for the 11 th FiveYear Plan. 67 It is cautioned thatthese estimates are for the entirepower sector, including thermalgeneration, transmission and distribution,but they do offer an ideaof the magnitude of contributionsfrom the key sources. Table 5 summarisesthese estimates.Thus, domestic banks and financialinstitutions are among thebiggest sources of funds for thepower sector. Their share wouldbe more than the 10.3% as suggestedin Table 5, since agencieslike the PFC also raise some oftheir resources from these banks.The PFC and the REC are alsomajor sources, but they have beenlending mainly to the thermalgeneration sector, with limitedcontribution to the hydro sector.In the case of the PFC, hydropowergeneration projects account forabout 13% of the total cumulativesanctions while thermal generationprojects account for 55%. 68The Funding GapHowever, the most significant fact that stands out from Table5 is that even with all these available sources, almost 44% ofthe funds still remain unsecured. Thus, funds are going to bea severe constraint for the power sector as a whole. In termsof accessing funds from the market, it should also be keptin mind that the power sector has to compete with otherTable 5: Percentage of Contributions from Various Sources of Funds for the11 th Five Year Plan for the Indian Power Sector, 2007-12Particulars / Source% of TotalOutlayTotal Funds Required With Equity to Debt Ratio of 30:70) 100%Equity AvailablePromoters including Foreign Direct Investment for IndependentPower Producers2.47%Internal Resources 6.10%Others 3.86%Total Equity Available 12.43%Additional Equity to be arranged (EQUITY DEFICIT) 17.56%Debt AvailableDirect Market Borrowing 2.42%Banks and All India Financial Institutions (AIFIs) 10.30%Power Finance Corporation (PFC) 7.87%Rural Electrification Corporation (REC) 5.73%India Infrastructure Finance Company Limited (IIFCL) 1.45%Multilateral/Bilateral Credits 2.68%ECA/ECB/Syndicated Loan, etc. 5.57%Total Debt Available 36.02%Additional Debt to be arranged (DEBT DEFICIT) 33.97%Total Deficit including Equity and Debt 51.53%Special Funds ( Government Funds under special programs forrural electrification and others)7.8%Total Deficit 43.73%infrastructure projects; within the power sector, hydro alsohas to compete with thermal power projects.A number of steps have been suggested to meet thefunding gap in the power sector, including a relaxationof the norms for how much banks can lend to the powersector, higher ceilings for total borrowings and interest ratesfor ECBs, special financial support grants in the form ofviability gap funds for generation and transmission schemesin remote areas like the northeastern region, and the state ofJammu and Kashmir.M o u n ta i n s o f C o n c r e t e : D a m B u i l d i n g i n t h e H i m a l aya s | 1 5