Published On:November 2 2011
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Fund release to power projects slows down

Financial Chronicle reported that Fund release to power projects are slowed down

As the power sector reels under severe economic and policy pressures, lenders have begun to withhold funds for projects. On the other hand, project delays have forced companies that have already borrowed to approach banks for rescheduling payments.

Power companies were finding it difficult to meet preconditions for drawing sanctioned funds. The preconditions include time-bound milestones. Delays in land acquisition or in securing environmental clearances are the main stumbling block.

Most of the sanctions are a function of milestones and if these milestones are not achieved, the agreement is only on paper,” as told by bankers.

Since the power sector is facing a barrage of issues like lack of fuel linkages, higher imported fuel costs and delays in land acquisition and environmental clearances, it hampers fund draw-down even after sanctions and underwriting.

Source: Financial Chronicle

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