According to reports, the Asian Development Bank plans to back $425 million worth of investments in India’s solar power plants to help the projects secure financing.
The Asian Development Bank plans to back $425 million worth of investments in India’s solar power plants to help the projects secure financing.
The Manila-based lender plans to guarantee 50 percent of loans that international and Indian banks make to solar projects that have less than 30 megawatts of capacity in the country, Sujata Gupta, head of the bank’s private sector group in India, told reporters today in Mumbai.
“We are also looking to help extend the tenures of the loans,” Gupta said. The ADB may help extend bank loans from an eight-year payback period to about 15 years, she said.
India, which the aims to generate 20,000 megawatts of electricity from the sun by 2022, today announced 37 winners of the country’s first solar power project auction.
The ADB is willing to cover as much as $150 million of any payment defaults from the projects resulting from problems including technological failures, financial difficulties or insufficient solar irradiation that could affect their output, Gupta said. It will offer guarantees for loans made over the next three years, she said.
That amount is enough to support a total of about $425 million worth of investments in solar projects, she said. The guarantee mechanism will back commercial loans made in Indian rupees, euros or U.S. dollars, she said.
The Manila-based lender came up with the credit-guarantee mechanism to encourage private banks to lend to solar projects whose sizes are capped at 5 megawatts by government rules and are too small for the ADB to lend to itself, Gupta said. The ADB is willing to invest directly to take as much as a 25 percent stake in solar projects of more than 30 megawatts of capacity, she said.
As Panchabuta has mentioned earlier, Asian Development Bank (ADB) had originally expressed its concern and felt that Solar Power Projects under JNNSM could face funding problem. Since, ADB has been looking at ways it could participate in the funding of Solar projects in India.