This was stated by the chairman, Central Electricity Authority, R N Srivastava, while addressing a gathering at the World Energy Council meeting on `Financing of Energy Sector in Developing Countries'.

However, funds have been the main constraints in the development of power sector projects and are not readily coming from the Indian financial institutions either. This is mainly due to the poor health of state electricity boards (SEBs), who are the sole buyers of electricity from these projects.

This view was shared by the adviser, infrastructure, IDBI, A K T Chari, who said the performance of the SEBs was highly unsatisfactory and unless they restructured their tariff and started charging commercial tariff from customers in the longterm, they would not be able to meet the terms stipulated in the power purchase agreements (PPAs), between the developer and the state.

This, Chari said would indefinitely delay the financing of the power projects by the financial institutions. This coupled with the limited escrowable capacity of the SEBs was also coming in the way of funding of these projects, he added.

BSES chairman R V Shahi said the government should do away with the 40 per cent cap on funding by the Indian financial institutions. Shahi said considering the international funding scenario in the past few years, it was becoming clear that the Indian investors had to rely heavily on domestic borrowings, which again could be done in a limited way due to the 40 per cent cap. This issue, he said, should be immediately looked into by the finance ministry, which was also being pursued by the power ministry.