I had the opportunity to be present at and be a moderator of yet another interesting conference, this one on financing of power projects. Held at Le Meridien, Mumbai, 15-16 Dec 2010, this was organized by theenergybusiness conferences, a division of UBM. It was held at the nice Le Meridien, Mumbai (see the event site here). EAI also happened to be the media partner for this event.
I was present only during one of the two days, so I surely missed something interesting. I had the opportunity to shake hands with the minister of state for power, Bharatsinh Solanki (our netas appear to have gone hitech!), so that’s a couple of lines more for my memoirs.
Some points I could glean from the first day:
- Chinese equipments flooding the market – SK Goel, CMD of IIFC was concerned about the amount of Chinese equipments flooding India for the power projects. He was keen to ensure that the quality of these equipments were fully tested and conformed to standards.
- Financing or high voltage distribution market – A person from the audience, from an Andhra Pradesh power distribution company, lamented that it was quite difficult to get financing for projects in the high voltage distribution domain. He also mentioned that AP had one of the lowest T&D losses at about 7.5%.
- ECB for power projects after Dabhol – CLP India got ECB funding for its projects in India (CLP is into both conventional and renewable power) This was mentioned as one of the most prominent ECBs into India after Dabhol. (the other one being that of AES?)
- FDI scenario for power sector in India – Hemant Joshi of CLP said that FDI had not yet joined the Indian power sector party yet (less than 5% of total). In contrast, a lot of FDI has gone into the power sector in China. FDI stays long term as opposed to many other forms of investments. In addition, he said that corporate governance goes up significantly with the increase in FDI.
- Some of the key reasons, according to Joshi, why FDI is not happening in power sector in India, even though the Electricity Act of 2003 allowed 100% FDI in power: (a) It’s not clear who’s going to get coal and who isn’t, (b) For foreign investors, there’s a concern that they have to depend on financially unhealthy state utilities for payment
- While on FDI, Joshi was able to show how India was performing poorly in FDI when compared to East European and other developing countries as well. (India’s total FDI 2009 was a little over $30 billion, and this equates to a small amount per capita, much smaller than for many small east European countries).
- In countries such as Thailand, assurance of gas supply and the health of the PPA made it much easier for FDI to flow into the power sector in those countries.
Panel discussion on Attracting PE for Energy Domain in India
I moderated the panel discussion on Attracting PE for Energy Domain in India . The panelists were Sunil Jain, COO of Green Infra and Karthik Ramachandran, Prinicpal, IDFC Project Equity. It was a nice combo, an investee on one side and an investor on the other, though technically, Green Infra could not be called a typical green firm getting funded as the firm itself was incubated by IDFC private equity. Some of the prominent questions to the panelists I asked were:
- Bottlenecks for PE investors into energy projects (one of them being the disconnect in valuation expectations between the entrepreneur and investor with the buoyant public markets resulting in an increasing buoyancy in expectations!). The answer from Karthik was yes, there is a disconnect at the moment and that it will be good for both the investee and the investors to take a longer term perspective when considering valuations.
- Whether pureplay wind energy companies have a good prospect of getting PE funded. To which Sunil Jain was of the opinion that with the latest GBI scheme and many companies wanting to become IPPs instead of putting up wind farms for depreciation benefits alone, very soon we could find PE folks interested in pure play wind power producing companies.
- The key takeaways I had, from an entrepreneur perspective, if I were looking for PE funds for my energy business (especially renewable energy business) are: (a) You need to show a team that has the ability to execute, (b) You need to prove that your project can scale, and (c) Your project should present demonstrable value addition for the market.
As I mentioned earlier, I was present only for a fraction of the entire event, so my narration above is certainly a rather truncated one. I think it will be more useful for you folks to see the entire list of speakers and their topics, so you might get in touch with them for more details on their presentations.
Speakers/contributors at the conference included:
Shri Bharatsinh Solanki, Minister of State for Power
Ministry of Power, Government of India
Sathyanarayan, Head, Power Plants
TUV Rheinland India
S K Goel, Chairman and Managing Director
India Infrastructure Finance Company Limited
Rajiv Ranjan Mishra, Managing Director
CLP Power India
Senior Vice President, Project Advisory & Structured Finance
SBI Capital Markets
Hemant Joshi, Vice President, Corporate Finance & Treasury
CLP Power India
Prashant Deshpande, Senior Director
Deloitte Touche Tohmatsu
Narasimhan Santhanam, Director
Energy Alternatives India
Ravi Raina, President, India Operations
Sunil Jain, Chief Operating Officer
Prakash Naiknavare, Executive Director
Co-Generation Association of India
Gayatri Ramanathan, Editor
The Energy Business
H D Khunteta, Director, Finance
Rural Electrification Corporation
Managing Director and Chief Executive Officer
Indian Energy Exchange
Saud Siddique, Joint Managing Director
Srei Infrastructure Finance
G Krishnamurthy, General Manager, Project Finance
L&T Infrastructure Finance Company
Sanjeev Sancheti, Chief Financial Officer
Srei Infrastructure Finance
Nikhil Rohera, Executive Director, Direct Tax
Kartik Ramachandran, Principal
DFC Project Equity Company
Chief Financial Officer and Company Secretary
Tata Power Mundra Project
Debasish Mishra, Senior Director
Deloitte Touche Tohmatsu
Professor V K Damodaran,
Vice Chairman, Energy Management Centre
Government of Kerala
Details of presentations and panel discussions
Conference Day 1
Clarifying the implications of the latest capacity addition targets for new energy projects and financing options – Bharatsinh Solanki, Minister of State for Power, Gov of India
Leveraging government support in driving the financing of conventional and renewable energy projects – SK Goel, CMD, Indian Infrastructure and Financing Co
Exploring the innovative modes of financing to meet the challenges of capacity addition in the 12th 5 year plan – a representative from the Rural Electrification Corporation
Panel Discussion – Identifying strategies to secure attractive sources of banking finance for capital intensive energy projects
Jayant Deo – MD & CEO of Indian Energy Exchange
Rajat Misra – Senior VP, Project Advisory and Structured Finance, SBI Capital Markets
G Krishnamurthy, General Manager, Project Finance, L&T Infrastructure Finance Co
Chandrasekhar R – Global CEO, IT Power
Updating on the latest RBI plans for infrastructure and green bonds to fuel the financing of power projects – Raj Kumar Roy, Director, Financial Advisory, Deloitte Touche Tohmatsu
Driving the influx of FDI investment into the Indian energy sector to fuel the rapid deployment of power projects – Hemant Joshi, Vice President, Corporate Finance and Treasury, CLP India
Panel Discussion: Navigating through various strategies in taxation to enhance revenues for your investment
Prashant Deshpande, Senior Director, Deloitte Touche Tohmatsu
Nikhil Rohera, Executive Director (Direct Tax), PricewaterhouseCoopers
GPG Sharma, Vice President, Accounts – Srei Infrastructure Finance
Devising a strategy for attracting high levels of investment for wind energy projects – Sunil Jain, Chief Operating Officer, Green Infra
Conference Day Two
Making Ultramega projects (UMPP) attractive to domestic and international investors – Ramesh Subramanyam, CFO and company secretary, Tata Power Mundra Project
Evaluating the suitability of public-private partnerships (PPP) to fund and fuel energy projects in India
Ravi Raina, President, India Operations – Astonfield Renewables
Prakash Naiknavare, Executive Director – Co-generation Association of India
Professor VK Damodaran, Vice-chairman, Energy Management Centre, Gov of Kerala
Attracting sources of ECB financing for a range of energy projects – Prabal Banerji, CFO, Adani Power
Determining the best sources of investment to drive solar energy projects – Ravi Raina, President, India Operations – Astonfield Renewables
Identifying innovatives sources of finance for small hydro projects – Prof VK Damodaran, Vice Chairman, Energy Management Centre, Gov of Kerala
Securing attractive sources of finance for biomass projects – Prakash Naiknavare, Executive Director, Co-generation Association of India
More details about this conference could be obtained from UBM India