The state-run IREDA (Indian Renewable Energy Development Agency) is all set to increase the financing of green energy projects. In 2016-17, it crossed Rs 10,000 crore mark by sanctioning loans of Rs 10,200 crore and in the next fiscal it has kept the target of Rs 13,000 crore for itself as it is vying for nearly 20 percent of the loan market share. The agency has given these loans for solar, wind, biogas and small hydro projects all of which fall under the renewable energy.
The Government of India is working at a good pace to attain its goal of 175GW of renewable energy by 2022 and thus is aiming at adding 15 to 16 GW of clean energy projects this year. This includes both solar and wind capacity and to install this capacity a corpus of around Rs 65,000 crore will be required.
The company having the status of Non-Banking Financial Company (NBFC) is currently under the Ministry of New and Renewable Energy. The chairman and managing director, KS Popli said that they want to come out of it by floating an IPO (Initial Public Offering) later in the year with the approval of the cabinet.
He said, “We plan to sell around 13 crore shares divesting 15% of our stake.” Though the share prices are not yet decided, he hopes that shares will sell at Rs 40-50 a share premium after listing.
The agency, which is already working as a green bank, has initiated the process of converting its status from NBFC to green bank on papers. It needs some formalities to be completed before they can get this change done and they are already in the process to get it.
Popli said, “Some people do feel that project viability may be affected by the dropping tariffs but I expect developers to take due care and get the right price for their power. My discussions with them suggest they have factored in everything. Besides, the advantage with low tariffs is that electricity boards will be more inclined to sign contracts for renewable energy which gives financiers like us comfort that repayments will be made.”
The tariffs of both solar and wind power are falling due to the government’s efforts, which is a welcome step for the discoms and the consumers alike, but not good news for the financiers like IREDA. This is because the margins of its borrowers are getting squeezed, which will demotivate the new borrowers and the current ones can falter on payments.