POWER FINANCE CORPORATION LIMITED

(Government of India Undertaking)

Presentation on

“Initiatives of Government of India in Power Sector”

At BRICS FORUM, Chennai

By Shri Rajeev Sharma, CMD

18th November, 2016

 Structure of Presentation

1. Overview of Power Sector in India

2. Long Term & Medium Term Demand Projections

3. Role of Power Finance Corporation Ltd

4. Initiatives of Government of India

5. Impact of Government of India Schemes

Funding for brighter tomorrow 1

1
 Power Sector Overview (1/2)

 All India Installed Capacity (MW) As on 31.10.2016 (In MW)

Grand Sector
Sector Thermal Nuclear Hydro Renewable
Total wise %
Central 58,751 5,780 11,651 - 76,182 25%
State 71,155 28,341 1,975 1,01,471 33%
Private 82,563 3,120 43,942 1,29,625 42%
All India 2,12,469 5,780 43,112 45,917 3,07,278
Discipline wise % 69% 2% 14% 15%

 Summary of Capacity Addition Targets for XII Plan In MW

Thermal Nuclear Hydro Total Sector wise %

Central 14,878 5,300 6,004 26,182 30%
State 13,922 - 1,608 15,530 18%
Private 43,540 - 3,285 46,825 52%
Total 72,340 5,300 10,897 88,537
Discipline wise % 82% 6% 12%

 Per capita power consumption at 1075 kWh - Low as compared to world average (2015-16)
 Present Peak shortage – 3.20% (2015-16)
 Present Energy shortage – 2.10% (2015-16)
 All Indian Average PLF – 58.13% (Sep 2016)

Funding for brighter tomorrow 2

2
 Power Sector Overview (2/2)
 Increase in demand of power due to following factors
- Rural Electrification
- GDP Growth Rate
- 24x7 Power for All
 Changing landscape of Indian power sector & recent developments
- Increasing share of private sector in capacity addition
o 9% in X Plan
o 42% in XI Plan
o Expected to be more than 60% in XII Plan
- Fuel related issues
o Inadequate availability of domestic coal and domestic natural gas
o Difficulty in obtaining clearances for coal mines
o Inadequate fuel supply agreements for coal
o De- allocation of coal mines
- Time, Cost over run and funding related issues
- PPA related issues
- Land acquisition related issues
- Poor financial health of state distribution companies
Funding for brighter tomorrow 3
3
 Long Term & Medium Term Demand Projections

Long Term Power Sector Projections

It is estimated to sustain 7.4%GDP growth till 2047(NitiAayog Report Apr, 2015).
Installed capacity needs to increase from current levels of 300 GW to
• 562 GW by 2030
• 1,112 GW by 2047

Medium Term Projections

Next 5 years power sector requires USD 294 billion investment
• Out which USD 118 billion investment is required in renewables (Renewable capacity of 175 GW by
2022)
There is no doubt that huge investments are required. However, the investments flowing into the power
sector will depend on the reform measures / structural changes improving the overall attractiveness of
the sector.

Funding for brighter tomorrow 4

4
 Overview on PFC
 1986 : Set up by GoI as dedicated Financial Institution for Power Sector
 1990 : Declared as Public Financial Institution (PFI)
 1998 : Registered as NBFC with RBI
 1998 : Declared as a “Mini Ratna Category-I” PSE by GoI
 2007 : Declared as a “Navratna” PSE by GoI
 2010 : Categorized as NBFC-ND-IFC by RBI (Infrastructure Finance Company)
 Allows 5% additional lending exposure

Ownership
 1986 : 100% owned by Govt. of India
 2007 : 89.78% Government holding – Post IPO (over subscribed 77 times)
 2011 : 73.72% Government holding – Post FPO (over subscribed 4.3 times)
 2014 : 72.80% Government holding – Post ETF (Exchange Traded Fund)
 2015 : 67.80% Government holding – Post 5% Disinvestment (over subscribed 2.34 times)

Funding for brighter tomorrow 5

5
Financial Performance at a Glance (As on 31.03.2016)
Financial  Cumulative Loan Sanctions - $ 77.8 billion
Assistance to  Cumulative Loan Disbursements - $ 57.8 billion
Indian Power  Outstanding Loan sanctions - $ 20.1 billion
Sector  Cumulative Capacity Supported - ~ 2,02,000 MW

Performance  Loan Assets - $ 35 billion

 Net NPA - 1.00%
 Net worth - $ 4.7 billion

Borrowings  Cumulative Borrowings ~ $ 56.8 billion

 Total borrowing outstanding - $ 29.4 billion
(Bonds - 86%, Rupee Term Loans – 9%, FCLs – 5%)

Funding for brighter tomorrow 6

6
Contribution to Power Sector

Key role in Implementation of GoI Flagship programmes

 Nodal Agency for AG&SP Scheme in IX & X Plan

 Counter-part funding agency for APDRP Scheme in X Plan

 Nodal Agency for development of UMPPs

 Bid Process Co-ordinator for development of ITPs

 Nodal Agency for Restructured APDRP Scheme

Funding for brighter tomorrow 7

7
 Opportunity to invest in power sector
Various fund initiatives of Govt. of India

 Indian Renewable Energy Fund (IREF) – USD 1to 1.5 billion

 PFC in principle agreed to invest USD 100 million

 Renewable Energy Certificate Fund – providing long tenure low cost fund to
stressed hydro projects

 Fund for supporting small hydro projects

 Stressed Asset Equity Fund (SAEF)

 Stressed Asset Lending Fund (SALF)

Masala Bonds – Plan to raise USD100 million

 Plan to raise Masala Bonds in Nov-Dec, 2016 subject to competitive pricing

Funding for brighter tomorrow 8

8
 Initiatives of Government of India
UMPPs – PFC nodal Agency (UMPPs: 4 transferred, 4 fast track and others in
pipeline)
• Aims to deliver low cost power through
• Competitive tariff due international tariff based bidding
• Economies of scale benefits as each project is ~ 4000 MW each
• Higher efficiency due to Super critical technology

IPDS(R-APDRP subsumed)Outlay $ 9.6 billion & sanctioned $ 9.4 billion

• Strengthening of power distribution sector in urban area

Funding for brighter tomorrow 9

9
 Initiatives of Government of India
DeenDayalUpadhyaya Gram Jyoti Yojana (DDUGYY)
• Feeder segregation for 24X7 power (separate line for farmers)
• Strengthening Sub T&D in rural areas
Scheme Outlay : $ 11.2 billion (Sanctioned : $ 10.9 billion)
Scheme Outcome: 8 hours of quality power supply to farmers & 24-hour electricity
to households
UJWAL DISCOM ASSURANCE YOJANA (UDAY)
A scheme for turnaround of DISCOMs (notified Nov, 2015) aims at
• Reduction of AT&C loss to 15% by 2018-19
• Reduction in gap between ARR & ACS to zero by 2018-19
• Almost all DISCOMs to be profitable by 2017-18, remaining 3-4 by 2018-19

Funding for brighter tomorrow 10

10
 Initiatives of Government of India
Push to Renewables
Target by 2022 : 100 GW of solar and 60 GW of wind energy
• Solar projects 20,900 MW tendered
• Green Energy Corridors of $ 5.6 billion envisaged for transmission of renewable
energy
• 33 Solar parks in 20 states are envisaged

24X7 Power For All (PFA) by 2019 - Uninterrupted power supply 24X7
A comprehensive programme encompasses overall development of power
sector including reforms at all India level
• Envisages building generation, transmission and distribution capacities
• Operational efficiency & reform measures
Funding for brighter tomorrow 11
11
 Initiatives of Government of India
AMENDMENTS IN THE TARIFF POLICY (Jan, 2016)– giving push to
• PFA : State Govts/Regulators to ensure PFA, micro grids to connect remote
areas
• Efficiency : to expand existing power plants, install smart meters enabling “time
of day” & net metering, creation of transmission lines across India
• Environment : RPO of 8% by 2022, RGO, hydro projects through long term
PPAs and exempt from competitive bidding till 2022
• Ease of doing business: allows pass through for any change in domestic
duties, levies, cess and taxes in competitive bid projects, clarity on tariff setting
authority in multi-state sale etc.

Funding for brighter tomorrow 12

12
 Impact of Government of India Schemes
IPDS(R-APDRP subsumed)
Progress
• IPDS Sanction $ 3.8 billion for 3,597 Towns for 30 States/UTs in about a year
• 1,228 towns achieved Go-Live under R-APDRP
• 17 states have reported Go-Live of 100% towns
• 923 out of 1,228 Go Live towns reported AT&C loss reduction upto> 25%

DeenDayalUpadhyaya Gram Jyoti Yojana (DDUGYY)

Progress: Out of 18,452 villages to electrified
• 59% electrified (10865 Towns)
• 21% in progress (3,840 Towns)
• 16% yet to start (2,995 Towns)
Funding for brighter tomorrow 13
13
 Impact of Government of India Schemes
UJWAL DISCOM ASSURANCE YOJANA (UDAY)
Progress
• 16 States / 1 UT signed UDAY MoU – (Raj, UP, Chats, Jhark, Punj, Bihar, Haryn, Guj, Uttara, J&K,
Goa, Karnataka, AP, Maha,MP,Manipur, Pudcherry)
• Bonds raised under UDAY – $ 26.8 billion till date
• Total DISCOM Liabilities : $ 31.8 billion (as on 30 Sep, 2015)

• Bonds Issued: $ 26.8 billion (almost 84% bonds have successfully subscribed)

Physical Progress on UDAY

• 16 States / 1UT signed UDAY MoU
• Bonds of $ 26.8 billion (84% of UDAYDebt) have been issued & subscribed
• 95% of feeder monitoring work is complete in UDAY States
• Feeder segregation 48% achieved (target to complete by Mar, 2018)
• At least 8 States have significantly narrowed gap between ACS & ARR
• 12 States have reduced AT&C losses

Funding for brighter tomorrow 14

14
 Impact of Government of India Schemes
 24X7 Power For All (PFA) by 2019

 Progress
 28States / 6 UTs already signed PFA documents
 2 States are finalizing documents(UP &TN)

Funding for brighter tomorrow 15

15
 THANK YOU

Funding for brighter tomorrow 16

16