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Energy Efficient Industries to get partial loan guarantee

 Energy Efficient Industries to get partial loan guarantee

In a major development, for the first time in the State, the AP State Energy Conservation Mission (APSECM-Energy department) has constituted a committee of eight banks (Union Bank, SBI, PNB, YES Bank, IOB, Bank Of India, Central Bank Of India, HDFC bank,) and three non-banking financial companies (NBFC) (NABARD,PFC,IIFL home loans) for facilitating financing for energy efficiency projects in the state.  These financial Institutions will get benefit of Partial Risk Guarantee Funding for Energy Efficiency (PRGFEE) scheme if they empanel with Bureau of Energy Efficiency (BEE), GOI under the scheme. Members of Financial Institutes (FIs) have appreciated and welcomed the initiative of APSECM/State Designated Agency (SDA) of AP and assured full cooperation for sanction of loans for energy efficiency projects.

Under the PRGFEE scheme, BEE, GOI will provide partial guarantee to loan amount for energy efficient projects which are implemented through BEE empaneled ESCOs. This will help to scale up energy efficiency investments in AP for energy efficiency projects.

In a meeting with banks and NBFCs , a committee was constituted by secretary/energy by nominating executive of Union Bank of India as Chairman, executive of State Bank Of India as Vice-Chairman and chief executive officer of APSECM,SDA of AP, energy department as convener.

The Financial committee shall address the energy efficient projects at state level which are facing financing issues and the members of the committee shall finance these projects on technical recommendation of APSECM, SDA of AP. The committee shall also propose any policy initiatives for increasing Energy Efficiency (EE) financing and development of Energy Efficiency market in the state.

APSECM shall seek Energy Efficiency proposals from various stakeholders in different sectors such as industries (large or small), buildings, agriculture, etc and carry out technical appraisal of EE projects and based on technical viability, it will recommend the project to the FIs committee for financing such EE projects. Also, APSECM shall pursue with the financial institutes of the committee to enter MoU with BEE to get eligible to provide financing under PRGFEE (Partial risk guarantee fund for energy efficiency financing) scheme of BEE. 

Speaking on the occasion, energy secretary Srikant Nagulapalli said that the PRGFEE is an innovative financial instrument which uses the public resources to channelize private sector finance towards promoting of energy efficiency in different sectors. The BEE has formulated a risk sharing mechanism to provide financial institutions with a partial coverage of risk involved in extending loans for energy efficient projects. The BEE has allotted around Rs. 312 crores for the PRGFEE at National level.

Energy Efficiency is expected to play a key role in meeting the future energy demand in the State and is given highest priority. The energy department was implementing several energy efficiency programs of BEE that helps to improve energy conservation and energy efficiency measures in the State, Srikant said.

As a developing state, Andhra Pradesh has a lot of scope in improving energy efficiency in various sectors, including industry, buildings, municipalities, transport and agriculture etc. The government was considering energy efficiency as a powerful tool to increase energy security, reduce energy expenditure and mitigate greenhouse gas emissions. Chief Minister Y.S Jagan Mohan Reddy and Energy Minister Balineni Srinivas Reddy were fully supporting for strengthening the powersector and providing 24×7 power supply for industries, commercial and domestic sectors for which energy efficiency would play pivotal role in reaching the objective of Chief Minister, the secretary said.

He expressed satisfaction over the overwhelming response from banks and NBFCs to set up financial committee and requested all the members of banks and NBFCs to fully extend their support in financing energy efficiency project liberally and encourage the energy efficiency measures as a social responsibility also. He said that energy efficiency financing could be seen as a win-win situation for financial institutions and borrowers as well. The secretary also thanked Director General BEE and his team for supporting Andhra Pradesh to implement energy efficiency financing project which is expecting to help in increase energy efficiency investments in theState.

Under the PRGFEE scheme, the BEE will provide guarantees a maximum 50 per cent of the loan or Rs.10 crore per project, whichever is less, to the financial institutions which offer loans to industries or others to take up energy efficiency projects in Andhra Pradesh. In case of default, the fund will cover the first loss subject to maximum of 10 per cent of the total guaranteedamount and cover the remaining default (outstanding principal) amount on pari-passu (equal footing) basis up to the maximum guaranteed amount, the APSECM officials said.

The PRGFEE will be applicable for the industry, small and medium enterprises, municipalities, government buildings and private buildings having commercial and multi-story accommodations. Industrial, building and municipal sectors consume 50 per cent of total electricity consumption in country due to which the BEE has laid focus to improve energy efficiency in those sectors.

AP State Energy Conservation Mission (APSECM) of Energy department is the nodal agency to implement the PRGFEE scheme in Andhra Pradesh.

The BEE has estimated more than Rs 13 lakh crore ambitious energy saving investment potential will be available in country by 2031 out of which about Rs 8.60 lakh crore of investment potential will be avail with the industries, buildings and municipal sectors alone.

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