‘Global FIs to offset domestic cap on funds’

Undeterr-ed by the limited financial aid provided by banks to the companies undertaking infrastructure projects...

Undeterr-ed by the limited financial aid provided by banks to the companies undertaking infrastructure projects, Reliance Power chairman Anil Ambani on Friday exuded confidence and said financing of projects will not be a challenge for Reliance Power. As India is integrating with global economy, there are a large number of international financial institutions, banks and global capital markets that are ready to provide access to unlimited capital to promoters and projects, he said. “I doubt that the norms of the past will be held as a mirror to our face in the future,” Ambani added. At present, RBI’s group exposure norm limits the financial aid provided by an Indian bank to infrastructure projects.

While announcing details of the company’s initial public offer, he expressed confidence in carrying out the power projects even though the company has no prior experience. “We are looking at a relatively higher rate-of-return based on our efficiency, financing and strategy to create worth for the shareholders,” he said.

To ensure timely availability of equipment, Ambani said that the company is in talks with some of the world’s top manufacturers to enter into a cooperation for large scale manufacturing of turbines, boilers. The structure of the association is still to be worked out and the details of the same is expected in a few months. The company has set a target of generating 28,000 mw capacity in next five years.

Even though Reliance Power has received permission to build a 4,000-mw power project, the company is not restricted from generating additional power at Sasan and Krishnapatnam power projects. The company will be free to decide on pricing of the additional power, if it generates, and will have small, medium and long-term contracts for the same. The price fixed for the Sasan and Krishnapatnam projects is Rs 1.19 and Rs 2.3 respectively for the period of 25 years. “As we move into future, the cost of power is bound to come down driven by transmission and distribution losses and we should see fall in power prices in the medium to long term the way it has happened in telecom,” he said.