The Indian Renewable Energy Development Agency (IREDA) is set to float Rs 100 crore bonds to finance alternative energy projects. This follows the suspension of $130 million soft loans by the World Bank and other multilateral lending institutions following the Pokhran blasts.
Official sources said the bonds would be made tax-free to make them attractive for the investor. The period of the bonds may be one to three years.
A shorter period is targeted as the World Bank package soft loan has been suspended and not cancelled, said the sources adding there was hope of the loan being revived if the sanctions were eased.
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The ministry of non-conventional energy sources has requested the Planning Commission to include the bond issue in its allocation of funds for the 9th Plan period. This will be the first time that IREDA is tapping the market. The bonds issue should be out within the next quarter, said the sources.
Besides the bonds, IREDA has plans to tap other local sources of funds like short-term loans from banks and lending institutions if the need arises.
"Many of IREDA's projects are at a crucial juncture of execution and the government does not want these to be affected for want of funds," said the sources.
It has a target of generating 200 mw energy through alternative sources like small hydel, wind energy and biogas. Besides it has a mandate to prospect for new sources of energy and popularise use of alternative energy devices for which it gives a generous subsidy. In the past, IREDA has obtained soft loans from the International Bank for Reconstruction and Development, the International Development Association and the Global Environmental Facility at rates of under 7 per cent. "Having to raise high-cost rupee loans is going to hit some of the schemes," said the sources adding that there was the real possibility of delaying some projects.