EESL to raise Rs5,000 crore to fund expansion
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State-owned Energy Efficiency Services Ltd (EESL) is set to raise Rs5,000 crore from its promoters Rural Electrification Corp., Power Finance Corp. and NTPC Ltd as well as through loans from domestic and overseas lenders. The money will be used to finance a major expansion of energy efficiency services and products in 2017-18, managing director Saurabh Kumar said.
The firm, which raised its authorized capital from Rs500 crore to Rs1,500 crore in the current fiscal to facilitate the planned capital infusion, will also go for listing in a year or two for the next level of expansion, Kumar said.
EESL, which led the government’s drive to popularize LED bulbs for home and street lighting to cut energy consumption, is set to get into new businesses of revamping public buildings with energy efficient lighting and appliances, selling efficient air-conditioners to institutional buyers, installing efficient municipal water pumps and solar-powered farm irrigation, said Kumar.
The planned investments will be financed in the debt-equity ratio of 80:20. For this, the firm plans to raise Rs800-1,000 crore capital from promoters through a preferential issue.
A $200 million loan from ADB to be signed before the end of March, a $300 million loan from World Bank and a $100 million masala bonds to be issued in the US—both to be executed later in the calendar year 2017—are part of the plan to mobilize debt, said Kumar.
The expansion plan is aimed at cornering a major chunk of the country’s energy efficiency market EESL has estimated at Rs74,000 crore, of which only a small fraction has been tapped by energy services firms. This is part of the government’s broader plan to make the economy less energy intensive and to cut carbon emissions.
BP Energy Outlook 2017 has estimated that by 2035, India’s energy intensity of gross domestic product will drop by 36% from present levels as the country goes ahead with its clean energy promotion and efficiency improvement measures. The BP Outlook also predicted renewable energy will overtake oil by 2035 to be the second most dominant fuel for the country.
EESL’s revenue has risen 10-fold to an estimated Rs715 crore in 2016-17 from Rs70 crore from the previous fiscal. In 2017-18, it expects revenue to more than double to Rs1,500 crore. “By the end of March, we hope to start working in 60 towns for energy audit and replacement of large municipal pumps. The air conditioners we are introducing is 40% more efficient than the existing highest star rated ones. The initial procurement planned is for 100,000 ACs. These require enormous investments,” said Kumar.