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Thursday, Sep 30, 2004

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IFC arm to buy Rs 45-cr carbon credits from Balrampur Chini

M. Ramesh

Sources in the sugar industry say this agreement could turn out to be a precedent-setting one.

Chennai , Sept. 29

IFC-Netherlands Carbon Facility (INCaF), an organisation set up by the Washington-based lending agency, IFC, and the Government of Netherlands, is in talks with Balrampur Chini Mills Ltd for buying carbon credits worth Rs 45 crore.

Balrampur Chini Mills Ltd (BCML), promoted by the Saraogi family of Uttar Pradesh, has four sugar plants with a total capacity of 29,000 tonnes per day and two co-generation plants of a total capacity of 39.5 MW. The cogen plants supply more than 21 crore units of electricity to the Uttar Pradesh grid.

The plants are eligible for tradeable CERs, or `certified emission reductions'. The cogen plant saves carbon emission by producing energy through a non-carbon route. Under the clean development mechanism (CDM) of the Kyoto Protocol, countries that are responsible for high carbon emissions may fund a non-carbon energy project elsewhere in the world, by buying the CERs.

INCaF is a body set up to purchase, for the benefit of the Netherlands, CERs under the CDM framework of the Kyoto Protocol.

INCaF will purchase from BCML approximately 90 per cent of the CERs expected to be generated by the two cogen plants during the period between 2003 and 2012. The value of the CERs purchased is expected to be around 8 million euro (about Rs 45 crore). The money will be paid in instalments, on the annual delivery of CERs to the CDM registry account of the Netherlands, sources said.

According to Mr Kishore Shah, Chief Financial Officer of BCML, the INCaF-BCML agreement was facilitated by Ernst & Young. Sources in the sugar industry say this agreement could turn out to be a precedent-setting one, as many sugar companies are trying to secure CER purchase agreement for their cogen plants.

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