ADB to cut FDI risk, light up ultra mega power projects
Financial Express, Mumbai

SANJAY JOG

Posted online: Friday, September 08, 2006 at 0000 hours IST

MUMBAI, SEPT 7: In a significant development, the Asian Development Bank
(ADB) has agreed to extend hedging coverage to the developer of ultra mega
power projects (UMPP) to mitigate risk for FDI.
ADB has responded to the Centre's communication and drafted a Draft
Aide-Memoire. The Centre wanted to rope ADB in the development of specific
financial instruments for UMPP, as each such projects require investment of
the order of Rs 16,000 crore and involve both domestic and international
players.
So far 13 companies have been pre-qualified for the upcoming UMPPs at Sasan
(MP) and Mundra (Orissa) with the 4,000 mw capacity each. The PFC, which is
the nodal agency for the implementation of UMPPs, has set the deadline of
November 22 for the submission of request for proposals and financial bids
by these pre-qualified bidders.
Sources in the know told FE that under the Draft Aide-Memoire, ADB has
envisaged financial support for project companies in the form of debt,
equity and guarantees. It would include multi-tranchet finance facility and
sub-sovereign loan. ADB has offered possible financial intermediation
through the state-run power finance corporation to meet the pending needs of
project companies. ADB's move is in line with the bank's resolution in favor
of local currency funding. Under this funding, loan has been made available
to Indian borrowers.

Benny Kuruvilla
Focus on the Global South - India
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