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Department of Telecommunication plans subsidies, grants and overseas borrowings for telcos to invest in green technologies

According to reports, the telecom department plans to facilitate a mix of subsidies, grants and overseas borrowings through multilateral agencies to help cash-strapped telcos invest in green energy technologies mandated by the government It is likely to push for a slew of financing options by leveraging the infrastructure status available to tower operators, says a telecom department (DoT) note.

“Financing alternatives, including external commercial borrowings from World Bank and Asian Development Bank”, in addition to “subsidies from the ministry of new & renewable energy (MNRE) and the National Clean Energy Fund (NCEF),” are in the offing, the note says Tower companies will be eligible to easy bank financing, by way of softer interest rates and longer loan tenures since telecom towers enjoy infrastructure status. They will also be eligible for higher overseas borrowing limits, lower import duties and excise exemptions on telecom infrastructure equipment.

The latest overtures are aimed at assuaging concerns of telcos who maintain that they cannot afford the huge expenses needed to set up capacity for generating alternate sources of energy like solar, fuel cells, wind or biomass to meet DoT’s go-green targets. So much so, telecom operators and tower companies have been demanding viability gap funding (VGF) as a pre-condition to invest in capex-intensive green energy technologies.

The financing roadmap was recently discussed by DoT at a meeting with all telecom industry lobby bodies, where representatives of Telecom Regulatory Authority of India and the ministries of power, environment & forests, new & renewable energy were also present.

The DoT is likely to announce details after global consultant PricewaterhouseCooper offers an estimate of the VGF required by the telecom sector for meeting the government’s green targets. Since the stakes are huge, PwC’s Indian unit was engaged last year by the telecom industry to examine the techno-commercial feasibility of powering some 3.5 lakh mobile towers with alternative energy sources. It is expected to submit its report shortly.

The green telecom policy requires mobile operators to migrate 50% of all cell towers in rural areas and 20 per cent in urban areas to hybrid power by 2015. Hybrid power has been defined as a mix of grid supplies and renewable energy based on solar, wind, biomass or fuel cells. By 2020, these operators will need to run 75 per cent and 33 per cent of their towers in rural and urban zones respectively on hybrid supplies.

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