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|Dominant Player in the Renewable Energy Space||Interview with Debasish Majumder, CMD, IREDA|
You assumed the office of Chairman and Managing Director of IREDA almost two years back. Could you kindly sum up the major achievements of your organisation at this stage?
I have been the acting MD since December 2004 and have assumed charge as the Chairman and Managing Director of IREDA in June 2007. In 2004, when I took charge as acting MD, IREDA’s operations were not in a very healthy state. It was plagued with high levels of NPAs (Non-performing Assets) and low sanctions. Even disbursements stood at an abysmally low level of about Rs.2900 million. From that dismal situation, IREDA has steadily gone through a healthy transformation and has achieved disbursement levels of around Rs.7700 million in 2008/09. Sanctions during the year have also grown substantially to around Rs.15000 million. This year, we hope to do much beyond that both in terms of sanctions and disbursements, while bringing down NPAs to a negligible level. Our growth on year to year basis for the past few years is more than 25%, in spite of the current global financial crisis.
You have just moved into a new office ambience. So, what are the newer initiatives that are on their way to progressive implementation?
First of all, new office ambience is not what creates new initiatives. New initiatives flow from overall objectives of growth, sustainability and leadership. Towards this end, IREDA has consistently taken steps to maintain its leadership role as a dominant player in the renewable energy space. We have broadened our portfolio to include financing of energy efficiency and conservation projects, and medium and large hydro power projects. Innovative schemes have also been introduced for providing bridge financing for bagasse cogeneration projects, seeking loans under the Sugar Development Fund. In order to expand IREDA’s reach and increase market penetration, it has also entered into Memorandum of Understanding with the Power Finance Corporation and PTC Financial Services Ltd. Special efforts have also raised the resources at competitive rates even at times when favourable conditions did not exist in the financial markets. For the first time, IREDA has also raised resources to the tune of Rs.1000 million through taxable bonds that are listed in the stock market.
IREDA has made the maximum loan disbursements in the area of wind energy in comparison to other renewable energy areas so far. How long is this trend going to continue and for what reasons?
Requirement for loans would obviously depend upon the projects being set up by investors. Power generation through wind energy as a renewable energy investment is favoured amongst project promoters. As long as power producers and project developers find investments in wind to be attractive, loans in this sector would continue to be high. Wind sector would continue to find favour because of its inherent advantages in terms of well-researched resource assessment, modular units for installation, low gestation period, proven technology, low land requirement, and so on. Other renewable energy sectors do not often have these inherent advantages.
IREDA has been rated high as per the performance indicators set up by various multilateral and bilateral funding agencies. When do we expect to break a new ground, for example, any fresh line of credit for the solar energy commercialization programme?
IREDA has been very successful in attracting specific and targeted lines of credit from various multilateral and bilateral sources. Some of these lines of credit had soft terms, but generally, these are mixed lines of credit whose costs are some what less than commercial borrowings. We have recently signed a line of credit with KfW, Germany for 50 Million Euro. We are also in the final stages of discussions for another line of credit from them for about 20 Million Euro which is specifically aimed at removal of barriers in the biomass sector. We are also in discussion with JICA, Japan and AFD, France for various lines of credit.
Financing of solar energy projects would necessarily require funds at very soft terms because of the intrinsically high cost of solar projects and the risks associated with some of the newer technologies. We are presently discussing with Asian Development Bank for a specialised funds for financing solar energy pilot projects. Based on the success of the pilot projects, larger funds can be structured.
IREDA has been at the forefront of advancing soft loans for a variety of activities, be it manufacturing or system installation etc. Its appraisal skills are widely acknowledged. But has there been a real problem of customers who had their loan applications appraised heading for other financial institutions thus leading to precious loss of both time and resources at IREDA?
Firstly there never has been a real problem on this count. It is true that few loan applicants have obtained sanctions from IREDA but have decided to obtain loans from other lenders. This is a normal business practice and choice of lender would depend upon the terms and conditions associated with the loan.
The generation-based incentive for setting up solar thermal and solar PV based power plants has been a much talked about affair in the recent times. Could you please share the larger outcome of this scheme with our readers at this point of time?
The GBI has sown the right seeds. The most important outcome is that several states like Gujarat, Rajasthan etc. are clearly able to recognize the sun as a great resource and are able to identify the immense opportunity that solar energy can create along with the vast tracts of the barren land. These states have accordingly announced favorable policies to attract investments in the solar energy sector.
You have been a strong votary of recommending an enhanced utilization of various RE technologies in different sectors of our economy. Which sectors in your perception are going to be the leading platforms as far as actual deployment of such technologies is concerned?
That’s a difficult question because technologies keep changing with time. However, as evident even now wind would continue to have a leading edge over others for obvious reasons that I have mentioned earlier. In the medium term, there is likelihood of strong competition from the solar thermal power generation technologies subject to successful deployment of the first few plants. Another sector that would consolidate itself would be small hydro but these projects require long gestation period and are often technically complex from an implementation view point.
Finally, what message would you like to give to the readers of Akshay Urja?
I would like to remind all readers of Akshay Urja that each one of us must sincerely participate and contribute our mite in ensuring sustainable development through the clean and green route of renewable energy. If we really want to do good for this Earth and our future generations, we must always keep in mind the old saying that “We have not inherited this Earth from our forefathers but have only borrowed it from our children”. It is a great responsibility on each one of us. Wee must recognize this and act accordingly. (Courtesy: Akshay Urja)
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