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Budget 2013: Make renewable energy an independent sector, says FICCI

According to reports, stressing the necessity for setting-up projects on renewable energy, FICCI solar task force has recommended the government to make renewable energy as an independent sector and separate it from power sector exposure limit in budget 2013.

As per the prevailing banking practice, loans extended to renewable energy sector are accounted in power sector exposure limits. Further the power sector needs to grow to achieve the planned growth at an average debt funding requirement of Rs 2 lakh crore per year in the 12th Five Year Plan. Notably, the funds available for power sector will be inadequate to support renewable energy project , which are included in the power sector.

Consequently, this leads to extra pressure on the manufacturer and developer in obtaining project finance from Indian banks as these projects are compared with other conventional sources, explained FICCI.

“Being a nascent technology in India, despite favourable policies and support being provided by the Central government and various State governments, lenders are reluctant to provide financing to solar energy projects,” FICCI said.

Taking into account the above consideration, there may not be enough headroom for accommodating renewable energy sector under power sector exposure ceiling norms, which will affect the debt funding of renewable energy sector.

Thus, a paradigm shift of banks’ treatment of renewable energy sector as a sector different from power sector having separate exposure ceiling norms is required at this juncture, FICCI added.

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