EUR 200 million loan for renewable energy and energy efficiency in India
The European Investment Bank is providing a long-term loan of EUR 200 million to the Indian Renewable Energy Development Agency (IREDA) to help finance projects in the renewable energy and energy efficiency sector in the country. EIB Vice-President Magdalena Álvarez Arza and Shri Debashish Majumdar, Chairman and Managing Director of IREDA, signed the loan agreement in Delhi today.
EIB Vice-President Magdalena Álvarez stressed that “the Framework Loan will make long-term loans available to support renewable energy and energy efficiency projects in India, a priority for the Bank’s lending activity” and highlighted “the excellent cooperation with IREDA in this operation.”
Ambassador of the European Union to India, Dr João Cravinho, stated: “This agreement significantly strengthens an important dimension of our relationship with India, and it opens up new perspectives for cooperation between the EU and India in a sector that is of great interest for both. The private sector is the global engine of growth and the primary source of new investments and the EU is committed to encouraging such investments in India.”
The Framework Loan will significantly contribute to the EU-India Strategic Partnership in the area of climate change, fostering the development of renewable energy and the efficient use of energy. It will also contribute to covering energy demand and thus to economic growth and development in India.
The proposed Framework Loan will be a multi-investment scheme that will bring economic benefits to the region through the production of energy from renewable sources and will contribute to the reduction of greenhouse gas emissions and other airborne pollutants. The project schemes will be identified and presented by IREDA. The EIB will perform due diligence to ensure that all projects are economically and financially viable, technically adequate and in compliance with the Bank’s social and environmental standards and Guide to Procurement.
The EIB loan would provide long-term financing, whichwill enable IREDA to extend longer-term loans.This will bolster the financial structure of the renewable energy and energy efficiency projects, as the development of this kind of investment requires substantial financing with long maturities appropriate to the economic life of the project. The long-term loan will be reimbursed in several instalments over the next 20 years. The EIB finance will cover up to 50% of the total project cost.
This loan is being provided under the EUR4.5 billion Energy Sustainability and Security of Supply Facility.This is the EIB’s seventhoperation in India where it started operations in 1993. It is also the Bank’s first lending operation with IREDA, thegovernment agency funding only RE and EE projects.
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