State-Owned Power Finance Corporation

The state-owned power finance corporation (PFC) plays an important role in the power sector and is responsible for electricity management. It has played a pivotal role in the electrification of India Power finance corporation of India was established in 1986 and is the backbone of India’s power sector. It falls under the ownership of the Ministry of Power and has achieved the status of Maharatna from Navratna on 12th October 2021. Over the years, PFC has financed many large scale state-owned power projects, which have become power finance corporation subsidiaries. The article discusses the role of Power Finance Corporation and its function in the Indian Power sector.

Role of Power Finance Corporation in the Power Sector 

• It is a non-banking company, and the state-owned entity is under the control of the Ministry of Power, with its headquarters located in New Delhi, the capital of India.
• The major role of the PFC is in providing finance to various projects related to the power sector and electrification in India. It even provides consulting and advisory to various companies involved in the power sector.
• The power finance corporation subsidiaries consist of rural electrification and PFC consulting. There are many power infrastructures across many states wholly subsidiary of PFC. 
• The power finance corporation plays a critical role in the power sector by managing the operations through financing. PFC has provided financial assistance to various power projects across India to generate, transmit, and distribute electricity. 
• Some of the borrowers from the Power finance corporation of India are state electricity boards, central sector power utilities, state sector power utilities, private power companies etc. It is the nodal agency for financing and managing the finance and operation of UMPP (Ultra Mega Power Plants). 

The organisational structure of Power Finance Corporation 

The chairman and the managing director head the PFC. The organisation has three wings: the commercial, project, and finance & financial operation divisions.

• The commercial division is responsible for looking after the credit appraisal, reformation of the power sector, review and analysis.
• The project division is the one that is responsible for taking care of multiple state and project-based appraisals.
• The finance division is responsible for handling the financial operations like the mobilisation of funds and the disbursement.

Subsidiaries of the Power Finance Corporation

Power Finance Corporation Consulting is a subsidiary that handles fee-based services and provides necessary consulting and advice to the power sector. There are 12 Power Finance Corporation subsidiaries, and hence these are under the PFC as the parent company. Power Finance Corporation in India wholly owns all the subsidiary companies and hence helps in its operation and management of electricity.

The state-owned Power Finance Corporation has achieved the status of Maharatna, which provides it with financial and operational autonomy. With the grant of Maharatna status in Oct 2021, PFC has got the power to take higher and central level financial decisions in the power sector. It provides competitive finance in the power sector, making electricity more affordable.

The key strength of Power Finance Corporation of India 

• Power Finance Corporation is a non-banking financial company (NBFC) with the largest net worth reserve. The Maharatna status has granted it financial autonomy for better operation in the power sector.

As of 2021, the total revenue generated is INR 71,700 crore, out of which the net operating income is INR 19,884 crore. It is under the Government of India, which holds a 52.63% stake in the PSU.

• As of 2020, the total number of employees working for Power Finance Corporation is 484.
• It is a specialised corporation in the power sector that has helped in India’s electrification and supports the wholly subsidised power sectors across different states.
• It is considered a nodal agency for managing and handling the development of UMPP (Ultra Mega Power Project). It is even responsible for developing the Integrated Power Development Scheme (IPDS).
• Power Finance Corporation offers fee-based consulting to the power sector. It provides consultancy and advisory services to the power sector regarding finance, regulatory, and strategic aspects. 
• The IPO for Power Finance Corporation started in January 2007, and the stock was oversubscribed by 76 times. The company is currently listed on the National Stock Exchange and Bombay Stock Exchange. 
• PFC took over REC (Rural Electrification Corporation of India), and the overall transaction was completed on 28th March 2019. PFC obtained a stake of 52.63% in REC by paying Rs 14 000 crores to the Government. 
• Power Finance Corporation of India is an ISO 9001: 2015 Certified company. 
• The total sanction made by PFC in 2020 -21 is Rs 166370 crore, and the total disbursement made was Rs 88301 crores.

Conclusion 

The Power Finance Corporation is one of the largest PSUs, which is responsible for financing and consulting India’s power sector. It has a great role in the electrification of the country by supporting all types of power infrastructure. It has been granted Maharatna status, providing better autonomy in finance and operations. There are 12 wholly-owned subsidiaries of PFC across different states in the country. The IPO for PFC was one of the most oversubscribed stocks and is currently listed on the country’s two stock exchanges. The article provides the necessary information on the role of Power Finance Corporation in the country’s power segment.