NEW DELHI: India Power Fund, a venture capital fund of Power Finance Corporation, will be operational before the end of the current fiscal year. The fund has been in the pipeline since 2004.
The power sector will need an investment of more than $100 billion to add 68,000 mw of additional generation capacity, besides transmission and distribution network by 2012.
Power Finance Corporation CMD VK Garg said, “India Power Fund will be operationalised this fiscal. We are waiting for the partners to agree. LIC is already participating.”
The power ministry has sought an income-tax exemption of 20% of the total contribution for five years to the fund. The ministry feels tax break will help mop up resources. It will also help kick-start the India Power Fund, which has been in the making since February 2004.
The Reserve Bank of India had raised the risk weightage requirement, forcing possible investors in the fund to back off. PFC has been in talks with LIC and banks for contributions to the fund.
Earlier, PFC had considered starting the fund on its own in case LIC and banks declined to contribute to the fund. India Power Fund was announced in February 2004 by the NDA government to meet the shortfall in equity needs for the power sector.