IREDA listing gets cabinet approval in fresh push for renewable energy

New Delhi: The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the listing of state run Indian Renewable Energy Development Agency (IREDA), reiterating its emphasis on green energy.

India has an ambitious clean energy target of 175 gigawatt (GW) by 2022—and it needs money, about $200 billion, to achieve this.

The share sale will increase IREDA’s equity base and help it “raise more debt resources for funding RE (renewable energy) projects”, the government said in a statement. The sale will also “increase IREDA’s visibility in domestic and international financial markets,” the government added.

“IREDA, being the premier institution for RE Sector, will be required to raise equity funds to leverage loan financing for RE Sector,” the government statement said.

Experts said that the decision to sell shares in IREDA was a sign of the Indian government’s intent to move forward with its clean energy plans even as climate change goalposts are changing.

“I think Indian government has started to see that it does not need external money for India’s renewable targets as the market is bullish. The government is confident of achieving its renewable power goals and is positive that the renewable market is itself taking forward the momentum,” said Rakesh Kamal, a consultant with The Climate Reality Project, which works on climate change related issues.

India’s clean energy market has seen record low tariffs for wind and solar power projects of Rs3.46 per unit and Rs2.44 per unit respectively..

The CCEA’s decision follows the announcement of the US withdrawal from the Paris climate agreement on grounds that the deal favoured India and China and was unfair to the US.

India has since affirmed its commitment to the targets laid out in the agreement—ones that can be achieved only if the country pushes ahead with its renewables agenda.

Among other key decisions, the Cabinet approved a memorandum of understanding (MoU) for a $9 billion credit between the Export-Import Bank of India and Export-Import Bank of Korea. This will be inked during finance minister Arun Jaitley’s visit to South Korea on 14 and 15 June.

The export credit will be used for infrastructure development in India and for the supply of goods and services in other countries in key sectors such as smart cities, railways, power generation and transmission.

India plans to invest as much as Rs3.96 trillion in creating and upgrading infrastructure in the current financial year as part of a new integrated infrastructure planning paradigm comprising roads, railways, waterways and civil aviation.

The cabinet also approved a bilateral MoU between the Securities and Exchange Board of India (SEBI) and Iran’s Securities and Exchange Organization (SEO) for mutual cooperation on matters pertaining to securities markets.