IREDA to launch refinancing scheme for stressed Biomass and Small Hydro Projects

MNRE and Indian Renewable Energy Development Agency (IREDA) invites comment on IREDA-NCEF Refinance Scheme for Revival of the Operations of existing Biomass power & Small Hydro power projects affected due to unforeseen circumstances. “National Clean Energy Fund” will be used for funding the scheme.

The basic eligibility for projects to be covered under the scheme is as follows:

  1. Grid connected combustion based biomass projects upto 10 MW and SHP projects upto 5MW.
  2. Projects should have been commissioned during 01.04.2003 and 31.03.2013.
  3. Should have been operational for at-least 2 year post COD, with a minimum PLF of 40% and 25% for biomass and SHP respectively.
  4. Refinancing will be limited to the 30% of the outstanding loan amount at an interest rate of 2%. The minimum refinancing will be Rs. 1.5 cr limited to Rs. 15.00 Cr.
  5. The project should also have min. of average DSCR of 1.1 after taking into account IREDA refinance amount and should be able to service the loan.
  • The scheme also provides no-go conditions for the project, which are will-full or non-cooperating defaulters as per RBI norms. Projects which are not operating since 5 years or are profit making in last audited FY are also not eligible for the scheme
  • IREDA will provide funds received from NCEF to scheduled commercial banks and financial institutions. Banks and FI, which are, profit making in last 2 years and gross NPA of less than 5% of the complete lending portfolio are eligible for getting
  • IREDA will act as the nodal agency for the scheme and selection of projects will be on sole discretion of IREDA.
  • IREDA will have the right to inspect various aspects related to the plant performance post sanction of refinancing.

The scheme aims to revive the renewable energy projects which are stressed due to various unforeseen reason like low tariffs, higher wheeling and banking charges, cancellation of PPAs, higher transmission & cross subsidy charges, in addition to abnormal escalation of biomass fuel costs (in case of Biomass Power Projects) apart from the force majeure conditions such as floods, cloud bursts, draught etc.

However, proper implementation of the scheme and selection of projects, which can be made financially viable after the restructuring, will a herculean task for the implementing agency. Also, as of now the scheme do not earmark any specific targets for refinancing . The amount of funds allocated from the NCEF is also not mentioned in the scheme.

As earlier also schemes of financial support for renewable energy like GBI has faced funding crunch at times and also uncertainty over continuation, the project developers need to move fast and grab the opportunity.

 

Link to download complete scheme.

 

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