The Hindu Business Line : PE investors give CFL schemes a boost

New Delhi, Aug 16 Global investors, including private equity majors and dedicated carbon funds, are throwing their weight behind compact fluorescent lamp (CFL) manufacturers in their bids for “green” projects on the anvil, especially Clean Development Mechanism-based CFL supply schemes.

Climate Change Capital (CCC), which manages the world’s largest private sector carbon fund, has indicated its keenness to fund the CDM-based energy efficiency lighting projects being planned by the Centre as well as those coming up across States, such as Andhra Pradesh and Haryana.

Among PE funds, Baring Private Equity Partners plans to channel a significant amount of its $1-billion fund in India into the energy business, especially the clean energy segment, according to industry sources. Goldman Sachs and the Washington DC-based IRG — an international professional services firm that helps governments and the private sector manage critical resources — have already joined hands with CFL manufacturer Philips’ in its bid for an ambitious CFL-replacement project floated by the Indian Railways.

Railways project

“Having leading investors on board when bidding for a new, challenging project such as the Railways’ CFL scheme is always good. Both Goldman Sachs and IRG put their weight behind the Philips’ bid for the Railways project,” Philips’ Senior Director (marketing-lighting business), Mr Mathew Job, told Business Line after the company had submitted the Railways bid.

Interestingly, Philips was the sole bidder. This is because domestic manufacturers stayed away, citing ambiguous revenue streams and lack of clarity on the financial model for the project, wherein the Railways had invited bids to replace incandescent lamps with 26 lakh CFLs under the CDM benefit scheme. The bidding process was on the basis of carbon credits that manufacturers would, in turn, share with the Railways.

Ensuring efficiency

UK-based CCC, which manages the world’s largest private sector carbon fund, is keen on funding CDM-based energy efficiency lighting projects in lieu of receiving and encashing carbon credits generated from these projects. “As the investment manager of the largest private sector carbon fund in the world, we are looking at many greenhouse gas reduction projects across the globe, including India. India is an important country for CCC and we are building our team. We hope that energy efficient lighting will play an important part in our portfolio in India,” said CCC’s Marketing and Communications Manager, Mr James Burnham.

The Centre is currently working on a public-private partnership scheme to utilise the CDM provision of the Kyoto Protocol to increase penetration of CFLs among domestic consumers. The scheme aims at enabling private sector CFL manufacturers to collaborate with distribution utilities and sell these lamps at around Rs 10-15 a piece to households, while recovering the balance costs of CFL manufacture from CDM revenues.

Related Stories:
Philips-Goldman Sachs consortium lone bidder for Railways’ CFL project
CFL manufacturers stepping up production capacity
Global carbon fund keen to finance CFL project plans here

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PE investors give CFL schemes a boost