The government might ask RBI to classify renewable energy projects under priority sector lending

The Ministry of New and Renewable Energy (MNRE) is expected to write to RBI seeking to bring renewable energy projects under the priority sector lending. The development comes to light post there is stress seen in the conventional power sector which is negatively affecting the renewable energy sector and questions are raised by renewable energy project developers over lack of funds by banks.

At recent stakeholders meet, the Power Minister R.K. Singh talked about the matter.

“We are committed to remove the obstacles in the financing of renewable energy projects. We have taken inputs from different stakeholders. One suggestion was that priority lending should be done for renewable energy projects and without any limit.”

Currently, the rooftop solar projects are under the priority sector lending category, but the funding quantum is only 15 crores.

In the current scenario, the Non-performing assets (NPAs) in the thermal power sector are impacting investments in the renewable energy projects, disrupting the lending situation for the power sector completely including renewable projects.

Along with this, RE developers also face financial drawback with added cost due to safeguard duty implementation in the country and conflicting to that competitive tariffs with each auction announced. Developers at the meeting also raised issues regarding payment delays by distribution companies and their demand for 2-3% rebates on delayed payments.

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