Central Government has asked state lenders to provide over $1 billion to government power distribution companies to clear longstanding debts to green energy firms that could hinder further investment.
The companies owe solar and wind power generators including Goldman Sachs-backed ReNew Power and Softbank-backed SB Energy over 97 billion rupees ($1.35 billion), according to the Central Electricity Authority, an arm of the federal power ministry.
Adding to the problems of the power generators, a new government in Andhra Pradesh state – which owes renewable energy firms more than any other state – wants to renegotiate its contracts, saying the prices it pays are inflated.
The Central government has asked state lenders Power Finance Corp Ltd, REC Ltd and IREDA to extend short-term securitised loans to the distribution firms at preferential rates, two sources in government and one in industry said.
Commercial banks are unwilling to lend to these firms because of their high outstanding debt.
Foreign investment is central to India’s green energy ambitions, and a slowdown in overseas funding could hurt Prime Minister Narendra Modi’s commitment to increase adoption of renewable energy.
Reference- Economic Times, livemint, Business Standard