Out of the Rs 1992 billion requirement for the power sector, Rs 1394 billion is expected to be met by way of debt from the domestic and global markets and Rs 598 billion will be met by way of equity.

As per a paper presented by the State Bank of India on "the role of commercial banks in financing infrastructure projects" at the Euromoney conference held in the capital today, it has been further estimated that the requirement of domestic debt for funding power projects will be Rs 697 billion by 2001-02.

These figures vis-a-vis the effect of sanctions imposed by the US and Japan, have shifted the financing responsibility more on Indian financial institutions and banks.

However, the experience of the lenders, be it banks orthe financial institutions have not been very good as far as financing the infrastructure projects go.

In the power sector, the funding institutions feel that a series of reforms and liberalisation measures needs to be initiated by the government for attracting investment in this sector.

Sharing their experience on funding of power projects, top brass of the Industrial and Finance Corporation of India (IFCI) including its CMD, K D Agarwal and Executive Director, Tapan Ganguli said that a series of measures needs to be initiated by the government to make the power purchase agreements for these projects bankable. The PPAs need to be standardised instead of spending so much time on eac individual PPA's for power projects.

The health of the state electricity boards (SEBs) is concerning the banks and FIs the most as even if the promoter of the project is financially sound, it is none other than the SEB who will buy power from the. So the question whether the promoter or sponsor will be able to recover hismoney from his sole customer, i.e the SEB is not sure.

The government has taken measures to improve the health of SEBs but still lot needs to be done. The reforms initiated by Orissa and Haryana state electricity boards have taken very long and therefore the government should see that the reforms should be faster and should take place within a span of one to two years. This will reduce the problems of financing for power projects.

In addition to this, the procedural delays and delay in securing clearances at various levels from the Centre and state due to a communication gap between the two also needs to be resolved.

Promoters of the power projects are taking a minimum of five years to secure all requisite clearances for their projects which results in further delays for achieving financal closures.

IFCI chairman, Agarwal said that today funds are not a constraint with the banks and FIs but the fact is that today we do not have many bankable power projects. However, going by the investment estimatesin this sector, the situation is expected to change very fast and even the banks and FIs should gear up to face the funds requirements.