Goyal Asks PFC, REC to Fo­cus More on Fund­ing Re­new­able En­ergy Projects

Resource Digest - - CONTENTS -

The govern­ment has asked state-run Power Fi­nance Corp (PFC) and Ru­ral Elec­tri­fi­ca­tion Corp (REC) to ex­pand fo­cus on fund­ing re­new­able en­ergy projects. “I have asked REC and PFC for a pre­sen­ta­tion on spe­cial fo­cus prod­ucts on re­new­ables,“the min­is­ter for power, coal, re­new­able en­ergy and mines, Piyush Goyal, said. The govern­ment is con­tem­plat­ing a $1 bil­lion (`6,700 crore) fund to fi­nance re­new­able en­ergy projects, he added.

“I am wait­ing for the in­ter­est rates to come down fur­ther which would be the bench­mark for the eq­uity fund that we are pre­par­ing for the sec­tor,” Goyal said.

The two com­pa­nies have re­cently re­duced their in­ter­est rates to re­new­able en­ergy projects. REC lends to such projects at rates be­tween 10.5% and 11.5%, de­pend­ing on fac­tors like project vi­a­bil­ity and pro­moter's strength. Rates on loans to con­ven­tional and hy­dropower projects are higher at 11.75% to 13.40%.

The move is aimed at giv­ing a boost to the re­new­able sec­tor as well as util­is­ing the cash that the two fi­nanciers will re­ceive in lieu of loans given to state-run power dis­tri­bu­tion com­pa­nies post im­ple­men­ta­tion of the Ujwald­is­com As­sur­ance Yo­jana (UDAY). Un­der the UDAY debt re­cast scheme, REC and PFC will re­cover their ex­ist­ing debt ex­po­sure to state dis­coms in cash. The two have an ex­po­sure of more than $20 bil­lion to these dis­tri­bu­tion firms. The com­pa­nies plan to utilise the cash to fi­nance en­ergy projects, mainly green en­ergy projects such as so­lar, wind and biomass plants.

Lack of new con­ven­tional coal and gas projects by pri­vate de­vel­op­ers has prompted the two com­pa­nies to shift fo­cus to re­new­ables. Cur­rently, such en­ergy projects con­sti­tute nearly 10% of the loan port­fo­lio of REC and PFC.

Goyal said Ra­jasthan and Haryana have pro­gressed well in re­vival of their dis­tri­bu­tion com­pa­nies.

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