"We have to sit down and take more hard decisions to ensure at least two tothree projects achieve financial closure soon," Gupte said at Infranet' 99organised by Confederation of Indian Industry (CII) here.

She said promoters should look at various options including raising equityin projects in the infrastructure sector.

"The project can be taken into equity mode and it will be better that theydo not go back to the same sources to raise funds," she added.

On the scaling down of escrowable capacity of Madhya Pradesh from 1,500-mwto 900 mw by rating agency Crisil, she said the change of various issuesover the last year could have been the reason behind the scaling down andnot because the earlier estimates were wrong.

"Some estimates have been made at various points of time on the state'sability to pay and the scale down have been made due to the changingsituation," Gupte Said. Institutional financiers admitted that they werestill on a `learning curve.' SBI Capital Markets senior vice-president(project advisory & structured finance) K B Gopalakrishnan said, ``lenderswere also on a learning curve and a lot of delays have taken place infinancial closures.''

``We have learnt a lot,'' added Gupte, emphasising that ``we have to closeprojects, otherwise lenders and promoters will exit.'' ICICI's head of theinfrastructure industry group, G V Jagannatha Kumar, said speed in closingprojects was critical for both promoters and lenders of the projects knownfor their long gestation period. The session brought to the fore the need todevelop the domestic capital market, instead of relying over and over againon ADR and GDR route of funding infrastructure projects in the country.

Industrial Development Financial Corporation (IDFC) vice-president,operations, Sadashiv S Rao called for a need for new instruments for fundingroads, ports and power plants. ``Grassroot infrastructure projects have verylittle access to the capital market,'' said Rao.

Gopalakrishnan said the lenders needed letters of credit, escrow accounts,government guarantees, debt service reserves, financial covenants, trust andutilisation accounts and the pledging of shares by promoters. He also spokeof the need for transparent tariff structures, in which subsidies were nothidden, but upfront. Feedback Infrastructure Limited managing directorAbhijit Bhaumik said the country obviously had a clear need forinfrastructure and a great availability of funds, suggesting that there wasa slip somewhere. He spoke of innovative funding structures forinfrastructure projects, such as project development companies.

Samal Patti project reaches financial closure
The 106-mw Samal Patti power project in Tamil Nadu achieved financialclosure on Thursday, four years after the promoters signed an MoU for theventure. The entire debt portion of the Rs 400 crore project has beenarranged by the advisors to the project, SBI Capital Markets, which hasarranged the total amount in rupee funds.

The power plant has a debt to equity ratio of 70:30, in keeping with theindustry trend. The promoters, Shapoorji Pallonji and Ogden Energy of theUS, will contribute equity of Rs 128 crore.