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Funding from multilateral agenciesMultilateral agencies, such as the World Bank and the Asian Development Bank, havethe following focus: significant emphasis on environment and social issues with addedcosts of audits and certifications; and comparatively lengthy and time-consumingappraisal and due diligence exercise. These can be attributed to the requirement onthe part of multilateral agencies to study the risk profile of the project and pastexperiences of the progress of power sector reforms in the country. Furthermore,inadequate returns caused by the poor financial health of State Electricity Boards,financial implications of free electricity schemes bestowed by state governments ontheir constituencies, lack of comprehensive payment security mechanism, etc. areacting as deterrents to the advancement of funds by multilateral agencies to the sectorin a big way.Besides the above-mentioned issues that may become barriers, financial issues likequantum of funds, tenure of funds (funds that can support a power project for about 25years) and the cost of funds are major issues. On the policy side, the concerns aremainly regarding land acquisition, fuel linkage security and related issues, environmentalissues, financial health of power distribution companies, and regulatory issues thatcontrol the risk on account of fuel costs.2. Recent government initiatives for smooth project launchesTo facilitate project launches, the Prime Minister’s Office has mooted the setting up ofspecial agencies that would acquire all the necessary licences and approvals for aproject before bids are invited from investors. The proposed ‘Special Purpose Vehicle’under each Ministry would ensure that a project would be ready to be launched assoon as the bid is awarded. The laborious process being followed at present isexemplified by the case of 58 clearances a company requires to set up a power project,although this is a de-controlled sector and does not involve any licensing. A companyhas to seek these clearances from several agencies at the central, state and localgovernment (Panchayat) levels across various departments. The associated delaysmake accessing funds difficult.3. Suggested implementation mechanism for channelizing more fundsThe Working Group on Power for the 12 th FYP has also recommended implementationmechanisms aimed at channelizing more funds into the power sector.Policy interventions and financial measures for reducing funding gap• Tax incentive on investment: For garnering additional funds for the power sector, ajustification has been provided to introduce an additional investment limit of Rs50,000 per year for infrastructure bonds.• Institutional/regulatory interventions: Payment security mechanism has to be putin place.Fiscal and other measures to enable cheaper power• Technology transfer for developing and enhancing the existing manufacturing facilityin India needs to be incorporated in equipment procurement contracts. As a first73