More stable and more efficient climate-friendly energy supply for India:KfW supports measures for reducing loss and CO2 emission
Press Release from 2019-11-01 / Group, KfW Development Bank
- Credit line in the amount of EUR 200 million
- Investments in Indian power distribution companies' grid infrastructure
- Improved environmental and social standards
On behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), KfW has signed a loan agreement worth EUR 200 million with Power Finance Corporation (PFC), an Indian financial institution that specialises in the energy sector. The agreement was signed during the German-Indian cabinet consultations held in New Delhi on 1 November.
As part of this project, PFC will arrange a long-term investment facility, which will in turn issue loans to Indian distribution companies. The aim of the planned investment measures is to reduce technical losses and, as a result, ensure a more stable and more efficient climate-friendly energy supply in India. The sub-loans will be topped up by contributions of up to 10% from the distribution companies themselves. As a result, the private sector will generate leverage on the funds provided by KfW. The investment facility is a key step towards increasing the supply of renewable energy via the distribution companies involved.
“India ranks third in the list of countries with the highest CO2 emissions. In light of the ongoing growth in the economy and population, demand for electricity will also continue to rise. KfW financing to promote the use of renewables will make an important contribution to slowing the rise in greenhouse gas emissions and reducing the deficit in the power supply”, says Prof. Dr Joachim Nagel, Member of the KfW Group Executive Board.
The Indian government is planning to expand capacity for producing power from renewables to 175 gigawatts by 2022. In this case, renewables would make up around 50% of the total production output. Under the project measures, the rise in carbon emissions from the distribution companies promoted through the investment facility will drop by at least 10%.
A complementary measure will also see PFC receiving a financial contribution of EUR 3.5 million for investments including training measures at the distribution companies and the implementation of an environmental and social management system at PFC, which will significantly improve standards in the Indian energy sector.