New Delhi: A payment security mechanism has been put in place to protect green energy investments, India’s secretary in the ministry of new and renewable energy, Anand Kumar, told global investors on Tuesday on the sidelines of the Madrid Climate Conference.
The announcement comes amid concerns of global investors about the Andhra Pradesh government’s decision to have a relook at renewable energy contracts.
“Payment security mechanism to de-risk investments in renewable have been put in place," said Kumar, according to a government statement.
The statement assumes importance as the Andhra Pradesh government’s move had sent the wrong signal to international investors, and has serious implications on India’s ability to attract overseas investment and the perception about the sanctity of legal contracts in the country. This could also dent India’s image as a clean energy champion.
Mint reported on Wednesday about state-run Solar Energy Corp. of India (SECI) enforcing a tripartite pact to collect ₹276 crore in dues from the Andhra Pradesh government from the central devolution. The agreement between the Reserve Bank of India (RBI), the Union government and state governments provides comfort to power producers against payment defaults by state electricity boards. It has been invoked for the first time following a compromise reached last month to end the impasse.
The Centre has been trying to bring about a solution to the problem against the backdrop of India’s clean energy sector going through a crisis. The investors in Andhra Pradesh’s clean energy space, such as Goldman Sachs, Brookfield, SoftBank and CPPIB, are marquee names on the global investment landscape. As such, a negative signal from these investors may jeopardize India’s aspirations.
“We need to make the projects bankable and viable, resolve the uncertainties the projects may have in terms of bidders and bankers, keep processes transparent, and create ownership among all stakeholders," said Manu Srivastava, principal secretary in Madhya Pradesh’s new and renewable energy department in the statement.
In a related development, Kumar also stated that Indian Renewable Energy Development Agency (IREDA), one of the largest lenders in the country’s green energy space, is launching its own alternate investment fund.