Rural Electrification Corporation Ltd (REC) has signed a loan agreement worth euro 100 million (around Rs 700 crore) with the German government-owned development bank KfW.
The bank agreed to support a project development and capacity building grant of euro 500,000 for REC. The agreements were signed between Rajeev Sharma, chairman and managing director of REC, and Oskar von Maltzan, country director (India) of KfW. The loan, with reduced interest provided by KfW on behalf of the German government, will refinance sub-loans made by REC for renewable energy and energy efficiency projects in rural areas, according to KFW’s press release.
The grant component is intended to provide capacity building support to REC to enable the development of projects and innovative business models for energy access at the tail ends of the electricity grid.
REC is the nodal agency for the implementation of the Rajiv Gandhi Grameen Vidyutikaran Yojana, a national initiative for rural electrification, and is well placed in terms of infrastructure and cross-regional outreach to take forward the mission of access to clean energy. To tackle the problems of widening power deficits and mounting carbon emissions, the government has set ambitious goals to deliver access to the poor and to increasingly replace coal with renewable sources.
KfW German Development Bank is one of the largest banks in Germany and the largest financier of renewable energy projects.
About 15 energy sector projects with KfW loan commitments of more than euro 1.5 billion are in various stages of execution in India.