An increasing number of international financial institutions are now looking to partner with India to help it realise the ambitious renewable energy capacity additions targets the government has set for the next five to seven years.
The International Finance Corporation (IFC) has announced that it has entered into an agreement with the Indian Renewable Energy Development Agency (IREDA) to help finance new projects. IFC will co-finance renewable energy projects in partnership with IREDA through a master cooperation agreement which would reduce costs and time involved for borrowers.
This is the second master cooperation agreement signed by the IFC with an Indian financial institution, having earlier partnered with PTC India Financial Services to provide funding to renewable energy projects. The master cooperation agreement has become a standard practice at the IFC to fund projects globally. Since the agreement was created, IFC and its partners have co-financed more than $3 billion to support private sector projects.
IREDA is the leading lender to Indian renewable energy projects and has signed financing agreements with several international financial institutions. In 2012, it received a €200.5 million low-cost loan from German development bank, KfW, and last year, the US Export-Import Bank agreed to provide $1 billion in medium and long-term loans. IREDA also announced plans to issue bonds worth about $230 million. IREDA may also be authorised to disburse a part of the National Clean Energy Fund which is replenished by a tax of $3.1 per metric ton of coal mined or imported in India.
The funds raised by IREDA are expected to be distributed to private developers who qualify to set up government-backed projects. For this the agency has signed agreements with the Ministry of New and Renewable Energy and the Solar Energy Corporation of India.
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