This will ensure the availability of low-cost funding for the for renewable energy (RE) sector as the government aims to achieve the target of raising the installed RE capacity to 500 giga-watt (GW) by 2030 from the current level of 105 GW.
The parliamentary committee on energy has recommended that state-run lender Indian Renewable Energy Development Agency (IREDA) should be given a special window for borrowing at repo rate. This will ensure the availability of low-cost funding for the for renewable energy (RE) sector as the government aims to achieve the target of raising the installed RE capacity to 500 giga-watt (GW) by 2030 from the current level of 105 GW.
Additional investment of more than Rs 17 lakh crore is needed to attain the 500 GW RE capacity target by 2030, translating into annual investments of Rs 1.5-2 lakh crore. The estimated annual investments in the sector for last few years have been in the range of Rs 75,000 crore, the report by the panel presented in Parliament on Thursday noted. As per data from the department of promotion of industry and internal trade, FDI equity inflow in non-conventional energy sector between FY11 and FY20 has been $8.4 billion.
The panel also recommended that the Union ministry of new and renewable energy (MNRE) should explore the possibility of exempting state-run lenders PFC, REC and IREDA from payment of guarantee fee for raising funds from international multilateral agencies. The government charges a guarantee fee of up to 1.2% per annum for providing guarantee on the loan outstanding from international financial market. Alternatively, the panel suggested that the guarantee fee should be charged at a concessional rate.
At the end of FY21, the combined RE loan book of PFC, REC and IREDA was around Rs 65,100 crore. In the case of state-run IREDA, net non-performing assets (NPAs) account around 5.6% of its book value. Projects with total loan outstanding of Rs 2,442 crore funded by IREDA were NPA accounts at FY21 end. PFC had NPAs of Rs 333.5 crore and REC had Rs 40.7 crore in the RE sector. The Cabinet has recently approved the equity infusion of Rs 1,500 crore in IREDA which will enhance its net-worth and improve its capital adequacy ratio. IREDA, which is preparing to float its initial public offering, is constrained in meeting the financing requirement of large capacity projects mainly because of the RBI-mandated exposure norms and its low capital base.
Delay in payment from state-run power distribution companies and tariff related issue have been identified as the largest cause of NPAs in the sector, followed by delay in project implementation by the developers. While 31% of the IREDA NPAs (in terms of value) have been rendered non-performing due to payment and tariff related issues, 22% are NPAs because of delays in project commissioning. As much as 18% of the assets are NPAs due to various ‘force majeure’ related events, 15% due to technical issues and 11% are NPAs due the financial stress of the promoters.
https://www.financialexpress.com/economy/panel-for-special-lending-window-for-ireda/2426250/
