India’s utilities seen holding up $360 million for renewables

Clean-energy firms say they haven’t received payment for the electricity they generate for as many as 10 months, racking up deficits of $360 million


Halted payments may already be choking off credit for new projects, raising questions about whether Prime Minister Narendra Modi can achieve his targets to reduce pollution by spreading renewables. Photo: PTI
Halted payments may already be choking off credit for new projects, raising questions about whether Prime Minister Narendra Modi can achieve his targets to reduce pollution by spreading renewables. Photo: PTI

New Delhi: Some of India’s clean-energy companies say they haven’t received payment for the electricity they generate for as many as 10 months, racking up deficits of $360 million that may put the country’s green power ambitions at risk.

Companies that say they’re impacted include ReNew Power Ventures Pvt, back by Goldman Sachs Group Inc., Morgan Stanley’s Continuum Wind Energy, Orange Renewable Power Private Ltd and CLP India Pvt, part of Hong Kong’s CLP Holdings. Each are working in three states accounting for 40% of India’s capacity where payments are delayed.

Halted payments may already be choking off credit for new projects, raising questions about whether Prime Minister Narendra Modi can achieve his targets to reduce pollution by spreading renewables.

“We’re noticing substantial slow down in new credit to renewable industry compared to what we were seeing two quarters ago,” Arvind Bansal, co-founder of Continuum, wrote in an e-mail. He said the overdue payments are making lenders risk avert to renewable energy.

The world’s second-most-populous country wants to install 60 gigawatts of wind and 100 gigawatts of solar of solar by 2022.

The snafu with payments means “this year will be difficult” for the industry, said Sunil Jain, president of the Wind Independent Power Association. It estimated that power distributors in Maharashtra and Rajasthan owe the companies a combined $360 million.

Utilities respond

B.K. Dosi, the managing director of Rajasthan Renewable Energy Corp., said by telephone that payments have been delayed to some wind, solar and thermal power generators.

Anil Kumar Bohra, managing director at Jaipur Vidyut Vitran Nigam Ltd, a utility working in Rajasthan, declined to immediate comment when reached by phone. Text messages and calls to Manu Srivastava, managing director at M.P. Urja Vikas Nigam Ltd in Madhya Pradesh province, went unanswered.

“Maharashtra has dues since October, which are quite considerable given the fact that all 4.7 gigawatt installation is affected,” ReNew Power founder Sumant Sinha.

An official at CLP confirmed that company was affected by the delay but declined to comment further. A spokeswoman for Orange Renewables confirmed the issue is an industrywide problem and that the company backs the views of the industry association.

Generation peak

As India enters its monsoon season, when renewable-power-generating capacity peaks, unpaid bills may swell, according to Bansal. That could lead to even more wariness on the behalf of lenders.

“More risk for lenders will have higher cost so it will make loans unattractive to investors,” said KS Popli, chairman of Indian Renewable Energy Development Agency Ltd.

Indian power retailers have racked up more than Rs.2.5 trillion of losses partly because they’re forced to sell below cost to keep energy affordable. Their reliance on loans and subsidies has made them slower to embrace solar and wind over cheaper coal-fired plants.

Ashok Haldia, who heads PTC India Financial Services Ltd. said the risk in Maharashtra may be bigger than just delayed payments.

“They haven’t signed power purchase agreements for many generating projects and it’s a bigger problem not to find a buyer after installing capacity,” Haldia said. Bloomberg

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