Rabo India Finance gives more thrust to renewable energy sector

Says Rabo India director (project advisory and infrastructure management) Somak Ghosh: "In the area of sustainable banking and renewable energy initiatives we can add value with our world-wide expertise. The company is in the process of scouting for both domestic and overseas investors for its renewable energy fund named as Indian Renewable Energy Equity Fund. Rabo India Finance will be the ''country advisor'' for the private equity fund."

BTS is a Zurich-headquartered financial advisor and investment company specialised in facilitating business and investment in the Indian subcontinent The fund is expected to be ready by December 2003.

Ghosh says Rabo recently completed the project financing and advisory works of three hydel projects. The first project, the 24-mega watt Hemavati project in Karnataka, promoted by US-based Bio Development Inc, has already commenced operations.

The debt part of the project has been funded by Rabo, ICICI and IDFC. The other two projects, the 86-mw Malana project and 8-mw EDCL project, have already started commercial operations in Himachal Pradesh. The total project cost of these three project is estimated at Rs 500 crore. Rabo has a debt exposure of Rs 85 crore in these projects.

A substantial part of power from these projects is directly consumed by Power Trading Corporation and the remaining by the respective state electricity boards. The special status provided to the renewal energy projects allowed the firms to sell power directly to third parities, says Ghosh.

According to him, the small hydropower project is a highly capital intensive technology; consequently, the cost of power produced is highly sensitive to the interest rate charged on that capital. The cost of producing power from small hydropower projects will reduce considerably if they are financed at the same rate as conventional energy projects.