Onus on lend­ing agen­cies to help cut cost of cap­i­tal, tech­nol­ogy for green projects

FICCI Business Digest - - In Focus -

Upen­dra Tripathy, Sec­re­tary, Min­istry of New and Re­new­able En­ergy, has as­sured banks and other fund­ing agen­cies that the Gov­ern­ment of In­dia has put in place an elab­o­rate ecosys­tem to sup­port green projects and it was now up to the lend­ing agen­cies to help bring down the cost of cap­i­tal and tech­nol­ogy to re­al­ize the tar­get of gen­er­at­ing 170,000 MW of re­new­able en­ergy.

Inau­gu­rat­ing the FICCI Con­fer­ence on 'Green Bonds' sup­ported by HSBC inn New Delhi on Septem­ber 8, 2015, Tripathy said that the cost of credit was the most cru­cial com­po­nent for un­der­tak­ing re­new­able en­ergy projects as the cost of tech­nol­ogy was dif­fi­cult to bring down un­like other in­puts such as land and man­power costs.

He urged lend­ing agen­cies, in­clud­ing banks, financial in­sti­tu­tions and NBFCs, to take eth­i­cal re­spon­si­bil­ity for fund­ing green projects by is­su­ing ded­i­cated 'green bonds'.

Tripathy enu­mer­ated the var­i­ous ini­tia­tives of the Gov­ern­ment of In­dia to make fund­ing of re­new­able projects such as the 25-year power pur­chase agree­ment, the es­tab­lish­ment of es­crow ac­count, con­ces­sional ex­cise and cus­toms du­ties and set­ting up of a green en­ergy cor­ri­dor for evac­u­a­tion of power, pri­or­ity sec­tor lend­ing for re­new­able en­ergy projects up to Rs. 15 crore, home loans clubbed for rooftop projects, etc.

Ac­cord­ing to Ul­rik Ross, Man­ag­ing Di­rec­tor, Global Head of Pub­lic Sec­tor & Sus­tain­able Fi­nanc­ing, HSBC Bank Plc, UK, "The po­lit­i­cal sup­port for cli­mate in­vest­ments has never been stronger lead­ing up to the United Na­tional con­fer­ence on Cli­mate Change "COP21" in Paris later this year. Ac­cord­ingly to HSBC Cli­mate Cen­tre of Ex­cel­lence green bonds are an at­trac­tive so­lu­tion with has ex­pe­ri­enced good growth. The to­tal Green Bond mar­ket last year was about USD 40bn in new is­suance vol­ume which is still a far cry from the ad­di­tional in­vest­ment needed an­nu­ally of USD 1 tril­lion to fi­nance a 2°C world. HSBC be­lieve that scale in the green bond mar­ket can only be reached by in­tro­duc­ing gov­ern­ment spon­sored in­cen­tive struc­tures for green bonds, and we be­lieve In­dia has the abil­ity to do so."

Stu­art Milne, Group Gen­eral Man­ager & CEO, HSBC In­dia, said, "HSBC be­lieves that it also has a key role to play in de­vel­op­ing the ac­cess to cap­i­tal mar­kets for the clean en­ergy sec­tor. Cen­tral to this is our be­lief that while green bonds are cur­rently only a small part of the fixed in­come mar­ket, it has the ca­pac­ity to grow rapidly. We ex­pect, green bonds to soon be­come a prom­i­nent in­ter­face be­tween en­vi­ron­men­tally and so­cially con­scious cap­i­tal mar­ket in­vestors and green is­suers.”

Dr. Arbind Prasad, Di­rec­tor Gen­eral, FICCI, said, “To­day we are at a crit­i­cal and a defin­ing mo­ment in the trans­for­ma­tion of the In­dian econ­omy, re­quir­ing huge in­vest­ments in new ci­ties, en­ergy and trans­port sys­tems and other in­fras­truc­ture. In­dia's do­mes­tic plans on low-car­bon and cli­mate re­silient de­vel­op­ment call for sig­nif­i­cant financial out­lays from Gov­ern­ment sources.” How­ever, to meet the tar­gets, do­mes­tic pub­lic funds alone will be in­suf­fi­cient - and mech­a­nisms are there­fore ur­gently needed to raise and lever­age pri­vate cap­i­tal as well as in­ter­na­tional financial flows. As a part of this, it is crit­i­cal that the financial sys­tem's ca­pac­ity and readi­ness to re­spond to cli­mate change and other sus­tain­able de­vel­op­ment pri­or­i­ties is en­hanced, driv­ing in­no­va­tion across bank­ing, in­sur­ance, in­vest­ments and se­cu­ri­ties.

FICCI started the dis­cus­sion on 'Green Bonds' un­der the aegis of the UNEP In­dia In­quiry on De­sign­ing a Sus­tain­able Financial Sys­tem for In­dia. This con­fer­ence helped to ce­ment the dis­cus­sion on the pol­icy in­ter­ven­tions needed for green bonds.

Upen­dra Tripathy, Sec­re­tary, Min­istry of New and Re­new­able En­ergy, ad­dress­ing the con­fer­ence.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.