In what would bring relief to the renewable energy developers and shield them from delays in payment by distressed state-owned utilities, two state-run lenders — Indian Renewable Energy Development Agency (Ireda) and PTC India Financial Services (PFS) — have offered to pay these producers a part of the outstanding amounts to address their liquidity constraints.
The assistance under the Ireda scheme will be subject to a cap of R20 crore per developer and the lenders will charge an interest equal to the highest prevailing rate for the sector plus 0.5%, sources told FE. Similar facilities are offered by PFS as well.
The move comes at a time several renewable energy firms — including solar, wind, small hydro and biofuel-based units — are hit by payment delays of up to six months. The problem is acute in states like Rajasthan, Maharashtra and Tamil Nadu and the debt-servicing ability of the renewable developers in these states are hampered.
SK Bhargava, director-finance at Ireda, told FE that the mini ratna has been receiving queries from interested developers since they were intimated of the scheme at the start of this financial year.
Additionally, under the so-called “bill discounting scheme”, the funds released can be utilised only for clearance of dues of term lenders and meeting working capital needs. The borrowers will have to keep the money in an escrow account and the lender will have the first right over the proceeds received from the utilities, Bhargava said.
However, if the payment delays are extend beyond a year, the developer will have to repay the loan from his own sources.
“We hope that UDAY scheme (for financial restructuring of discoms) would improve the cash flow of discoms but in the meantime, the bill discounting scheme would help the developers in keeping their projects viable,” Chintan Shah, president and head, strategic business development, Suzlon Energy told FE.
“The discoms may delay the payment but they do not have a track record to be treated as defaulters and hence this scheme is targeted towards projects struggling with liquidity in the short term. This, along with the revolving credit scheme for renewable projects would help secure the assets of our borrowers,” PFS managing director and CEO Ashok Haldia said. He added that the non-banking financial company would extend the benefit of the scheme to new customers as well subject to their credit profile.
Ireda and PFS are among the leading lenders to the renewable energy sector with an estimated combined sanctioned loan of over `10,000 crore last fiscal.