PFC to finance power trading, distribution

Power Finance Corporation (PFC), the state-owned power sector lender, is working on a risk minimising strategy primarily aimed at addressing the risks involved with over-exposure to the capital intensive power generation sector.

“The company has formulated a policy involving diversification into forward and backward linkages that include funding the equipment manufacturing, fuel sources, power trading and power transmission and distribution,” R Nagarajan, PFC’s director (finance), said.

PFC is also increasing its focus on offering technical and consulting services, based on its decades of expertise in the power sector, acquisition advisory services, debt syndication operations and equity investments, apart from exploring the possibility of either acquiring or establishing a bank, he said.

“Our exposure has been just on the highly capital intensive power generation sector. We need to expand our base to minimise the risk. So we are doing forward and backward integration,” D Ravi, PFC’s executive director, said.

He said backward linkages essentially mean funding fuel sources and the transportation of fuels, while forward linkages would mean funding power distribution and various energy efficiency programmes pertaining to power distribution and power trading.

During the last fiscal, PFC disbursed loans of Rs34,100 crore, of which about 65% went into power generation. Of the total project wise loan assets till date, around 84% went into power generation sector.