Renewable energy sector to get Rs 1 lakh-crore boost from state-run lenders like Power Finance Corporation
State-run lenders to Power Finance Corporation and Rural Electrification Corporation are set to provide a boost of over Rs 1 lakh crore to the renewable energy sector as the two companies are looking to offer cheaper finance to low-risk commissioned renewable energy firms to help them replace costlier loans.
The move is aimed at utilising the cash that the two financiers will receive in lieu of loans lent to state-run power distribution companies. Shares of REC and PFC had taken a beating a day after the government announced the debt recast scheme Ujjawal Discom Assurance Yojana (UDAY) on November 5 for distribution companies as it is likely to hit the interest income of these companies.
At present, renewable energy projects constitute nearly 10 per cent of the loan portfolio of REC and PFC. The lack of new conventional coal and gas projects by private companies has also prompted the two companies to shift focus to renewable sector.
Under UDAY, the two companies will recover their debt exposure to state distribution companies in cash. PFC and REC have an exposure of over $20 billion to these companies.