World Bank Should Increase Financial Commitment for Indian Renewable Energy Sector: Secretary, MNRE

The global financial institutions including the World Bank should provide a clear roadmap and increase their financial commitment from five per cent to at least 15 per cent as finance has been the biggest challenge in development of renewable energy sector in India owing to high cost of capital, a top New & Renewable Energy Ministry official said at an ASSOCHAM event held in New Delhi.

“The international bodies must give a roadmap i.e. they must tell how much money they will give during next five years, today World Bank gives five per cent of their money for renewable, we need at least 15 per cent and we need a roadmap from these bodies because they are the central controller of funds globally,” said Mr Upendra Tripathy, Secretary, Ministry of New & Renewable Energy while inaugurating ASSOCHAM Solar India Summit 2016.

He said that government was roping in multilateral and bilateral agencies and banks thereby finding new ways to reduce the cost of capital. “We are thinking whether we can have a $1,000 million equity fund to help new companies to come up for solar to become a movement and to make a transit from megawatt to gigawatt.”

“The other day, I had talked to Mr Kamat from New Development Bank and he said yes we are taking it to the board that at least 15 per cent will come to the renewable energy and he said that ours must be much more,” said Mr Tripathy.

He said that this will provide a clear roadmap to the industry, so it knows that this much of money will come into the sector and it will help in bringing down the costs further.

“We have some $1,000 trillion in equity, pension and insurance funds, could we have a commitment from them that at least 10-15 per cent funds will come to renewable energy sector which is a common obligation where global finance plays a very important role,” said Mr Tripathy.

He also said that there must be a global mechanism to bring down hedging costs, not completely but at least partially.

The secretary informed that MNRE had been negotiating with many banks to take loans including the State Bank of India (SBI), Punjab National Bank, Canara Bank and others.

“To SBI we have told, why don’t you take $500 million from the World Bank, keep it in London and give the money in India so there is natural hedging and that money we are planning to the industry at lower rate of interest for rooftops,” he further said.

He said that union government had for the first time gave Rs 5,000 crore for raising bonds. “We have raised bonds and that money will also be made available to the industry.”

Earlier in his address at the ASSOCHAM summit, Mr A.K. Kapoor, member (electrical), Railway Board had said that Indian Railways was working to get international funding to harness renewable energy related potential for its operations.

“For international funding, be it in wind, solar, LED lights and even waste to energy, we are in different process of discussions, we will be successful in harnessing that also,” said Mr Kapoor.