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Saturday, December 02, 2006

PFC to file DRHP by mid-December

State-run Power Finance Corporation, PFC will file a new draft red herring prospectus, DRHP with the Securities and Exchange Board of India, Sebi by the middle of December for its initial public offer, IPO of 10.22% post-issue capital. This was necessitated after following the last week’s cabinet decision, reports The Financial Express.

The corporation had filed a prospectus with Sebi in June with for 10% IPO, and 5% disinvestments.

However, following strong objections raised by the Left parties, the Centre put on hold the company’s IPO and disinvestments in other government undertakings. Sources said, “PFC CMD VK Garg on Thursday met Sebi officials and said the company will file new a DRHP once it receives the government’s order.”

Sources said, according to a Cabinet decision, the entire proceeds from the proposed IPO would go to the PFC and not to the government.

According to sources, “the PFC desires to go to the public before the end of current fiscal. However, a decision in this regard will be taken only after taking into account the market apptite and various IPOs in the market.”

Meanwhile, Garg said the corporation alone would provide finance worth USD 30-35 billion for the proposed capacity addition of 66,463 MW during the 11th Plan period.

The PFC’s disbursement will increase to USD 6-7 billion by 2012 from USD 2.5 billion in 2005-06. In the current fiscal, the total disbursement will increase to USD 3.5 billion.

From 2012 onwards, the PFC’s annual disbursement would be USD 6-7 billion, he added.

Garg was speaking at the US-India business summit jointly organised by the Centre, the US department of commerce, FICCI and CII. Garg said financing India’s power sector would not be an issue as an adequate payment security mechanism comprising letter of credit, escrow agreement and open access had been provided for.

Talking about the present position on the development of ultra-mega power projects, Garg said the PFC would open bids for Sasan and Mundra projects on December 7, while price bids would be opened on December 14.

The PFC has been roped in by the power ministry as a nodal agency to implement the ultra-mega power project programme.

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