New Delhi: State-run power-sector lender REC Ltd is keen to finance nuclear power projects as it looks to spend ₹1 trillion a year on green energy for the rest of the decade, said its chairman and managing director (CMD) Vivek Kumar Dewangan in a interview.
The company, which is committed to spending ₹6 trillion for energy transition by 2030, will also look at financing cross-border transmission projects as the planned India-Sri Lanka transmission and other regional interconnections gain take concrete shape going ahead.
He said the company would look at sanctioning at least ₹1 trillion each year for green projects till the end of the decade.
“We are willing to finance nuclear but no one has come to seek financing for nuclear projects so far. We are open. That is also non-fossil fuel source. If someone is willing to come for seeking finance for a nuclear power plant we are open to finance that. We had certain discussion with Nuclear Power Corporation also for their upcoming projects. But they have not come to us yet for seeking finance,” he said.
He said REC has had initial talks with the Nuclear Power Corporation of India Ltd (NPCIL).
The plan to finance nuclear power projects comes at a time when the Union government is looking at increasing India’s nuclear power generation capacity to 22.4 GW from the current 8 GW. Nuclear power is considered to be a non-fossil resource as it produces little or no carbon emission.
At the recently concluded ‘RE-INVEST 2024’ conclave, REC committed the highest amount of financing among the public sector banks and non-banking financial companies (NBFC) for supporting India’s green transition by 2030. At the programme in Gandhinagar, Gujarat, it signed for loans worth ₹1.12 trillion.
Borrowing plans
Speaking to Mint, the REC CMD said that the target is to take its renewable energy loan book to ₹3 trillion by 2030, which would be 30% of its overall loan book.
“Last year we were able to (renewable energy) sanction projects worth ₹1.36 trillion. We do have sufficient projects in pipeline. Every year at least ₹1 trillion we will able to sanction for renewable projects in the next six years. That’s why, ₹6 trillion sanction target is there, but the loan book doesn’t grow that fast. That’s why I am targetting my renewable energy portfolio from ₹43,000 crore to ₹3 trillion by the end of 2030.”
Dewangan further said that although the company has diversified into non-power infrastructure sectors, the disbursal for those infrastructure projects has declined given the renewed focus on coal-based power along with green energy projects.
Noting that power generation, distribution and transmission remain the key focus areas for the company, the CMD said that the company would look at financing cross-border transmission projects.
“One Sun One World One Grid has been conceptualized but still lot of work is yet to be done. We are first looking into the neighbouring countries. India-Sri Lanka transmission line is not yet finalized, if that project comes we can think of financing. First the south-east Asia is our nearest opportunities,” adding that all such projects would be taken up after approval from the Reserve Bank of India.
Regarding RECs borrowing plans, he said the company is well on track to borrowing $20 billion or ₹1.6 trillion during the fiscal and has already disbursed about ₹84,000 crore in FY25. He added that external commercial borrowings at lower rates and 54EC capital gain bonds continue to be attractive sources of fundraising for the NBFC.
“We follow a very judicious mix of borrowing. Maximum we take (of) domestic corporate bonds (is) around 40%. Then we do take domestic term loans from the banks to the tune of 18%. Then, I have a special instrument, which is capital gains tax saving, called 54EC bond. That constitutes 10% of my borrowing. That is the cheapest source of fund available.”
Inclusion of the company under the 54EC of the Income Tax Act exempts investors buying bonds from it from capital gains tax, making their bonds more attractive.
“Then external commercial borrowing—we raise bonds and we also raise term loan from the banks in foreign currency. As of today foreign currency borrowing after hedging is cheaper option for me. We are using innovative hedging techniques. I am able to bring down my cost of external commercial borrowing to below 7%. My overall aim is to bring down the cost of fund. If the domestic borrowing is cheaper I will take more and more domestic borrowing. I will go for cheaper option.” Devangan said.
On Saturday, the company raised $500 million through green dollar bonds to support various renewable energy projects.
