The Hindu Business Line : Govt to float bonds to fund small hydel power projects

THE Government is planning to float a mega bond issue to fund small hydel and renewable power projects that would be set up in the next five to seven years.

The proposed Rajiv Gandhi Akshay Urja Bonds issue is awaiting the Prime Minister's nod before it takes final shape and hits the market.

The proposed issue will be placed in the market by the Indian Renewable Energy Development Agency (IREDA), a non-banking financial company under the administrative control of the Ministry of Non-Conventional Energy.

Simultaneously, the Government is also considering shifting all hydro-electric projects up to 250 MW to the Non-conventional Energy Ministry, which currently handles hydel projects up to 25 MW only. Projects bigger than 25 MW are handled by the Power Ministry.

Government sources said that the size of the bond and the duration and other details would be worked out once there is an in-principle clearance from the high-level Energy Coordination Committee headed by the Prime Minister, Dr Manmohan Singh, that is expected to take up the matter at its next meeting scheduled for Monday.

The other members of the committee include the Ministers for Finance, Power, Coal, Petroleum, Non-conventional Energy and the Planning Commission, officials said.

However, it would be commensurate with the total requirement when IREDA would act as the nodal agency for implementing all the projects, officials said.

Government sources said that IREDA, being a NBFC, was finding it difficult to raise funds from the market on its own and now a proposal to help the company mobilise resources from the market and further to strengthen its functioning is being considered.

For transferring hydel projects below the 250-MW benchmark to the Non-Conventional Energy Ministry, the high power committee would also consider a proposal to transfer 112 hydro-electric projects that are within the 250-MW band to the Ministry from the Power Ministry.

These 112 proposals roughly add up to 15,600 MW hydro-electricity, which is part of the total 50,000 MW hydel power envisaged for the Eleventh Plan.

According to industry estimates, the cost of setting up 15,600 hydel power capacity, the cost would be something around Rs 80,000-90,000 crore.

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