New Delhi: The US Export-Import Bank’s $1 billion programme to boost India’s clean-energy industry has been suspended after the institution’s lending authority lapsed, an Indian government official working on the project said.
Indian Renewable Energy Development Agency Ltd (Ireda), signed a memorandum of understanding with the US export credit bank in November covering the programme. The funding wasn’t finalized when the Ex-Im Bank’s charter expired on 30 June.
“It was only a memorandum of understanding (MoU) so you may consider it over for all practical purposes as of now,” K.S. Popli, chairman and managing director of the Indian agency, said in a phone interview from New Delhi.
The credit line would be revived if the Ex-Im bank regains its authority, Tarun Kapoor, joint secretary at the ministry of new and renewable energy, said by phone. The US Congress, divided about whether to renew the bank’s charter, allowed the institution’s lending authority to lapse at the end of June.
President Barack Obama announced the credit line on a visit with Prime Minister Narendra Modi in November. It would have underpinned a revival of lending to clean energy projects for the Washington-based institution, which at its peak four years ago contributed $721 million to the industry. The Ex-Im Bank loaned $200 million for renewables in 2014.
Lawton King, an Ex-Im spokesman in Washington, confirmed that the organization stopped authorizing new transactions when the programme lapsed on July 1. “The bank will continue to service all of its commitments and manage its portfolio until maturity,” King said in an e-mailed response to questions.
Members of Congress in Washington are debating what to do with the bank. Republican presidential contenders including Marco Rubio and Ted Cruz are calling for it to be liquidated.
The credit line for India didn’t gain traction in India partly because it was expensive and because it was routed thorough Ireda, Kapoor said.
The cost of the loan was expensive because it was routed through Ireda, which added in a hedging fee to offset the currency risk it would assume under the terms of the deal, Kapoor said.
India needs billions of dollars in investments to achieve its clean energy targets and anchor its commitments at a round of talks on reining in climate change organized by the United Nations for the end of this year.
India has 37 gigawatts of clean energy capacity now and seeks to have 175 gigawatts by 2022. Bloomberg
Source: Mint; 08 July 2015