IFC mobilisee Mizuho Corporate Bank's financing for Indian transmission project
09 July 2010
Mumbai: The International Finance Corporation is helping Japan's Mizuho Corporate Bank to finance its power transmission project to operates transmission links between east and north east India to the power-deficit north.
IFC has issued a long-term maturity currency swap that will enable Mizuho Corporate Bank's participation in the project without providing local currency funding, addressing one of the issues for foreign banks looking to fund infrastructure projects in the country.
''IFC's innovative structure, the first of its kind to be executed globally, allows a bank to invest US dollars to participate in a local currency loan," said Takeshi Kurita, general manager, global structured finance division, Mizuho Corporate Bank.
Kurita said that this would enable Mizuho Corporate Bank to invest in Indian infrastructure projects. ''We are keen to do more through creative financial structures that address the needs of projects and meet the requirements of international lenders,'' he said.
Participation from many more international commercial banks through similar novel financial structuring mechanisms can help meet India's rising project financing needs to address the country's infrastructure gaps.
Paolo M. Martelli, IFC director for South Asia, said, ''India, its infrastructure, and especially its energy requirements are a priority for IFC. To meet India's needs for project financing in the sector, our strategic focus has been one of evolving innovative frameworks to support private sector participation in generation, transmission, distribution, renewable energy, and rural electrification.''
In 2004, IFC provided a 15-year loan to Powerlinks Transmission Limited, a joint venture between Tata Power Company Limited and Power Grid Corporation of India, for their project connecting Tala Hydro power project in Bhutan with the grid in India. This was the first public-private partnership transmission line project in South Asia.
Operating since September 2006, electricity generated by Tala hydroelectric power plant in Bhutan is transmitted to power-starved parts of north India. The project facilitates improved evacuation of hydropower from Bhutan contributing to its economy in addition to reducing power shortages in North India.