The central government has okayed the listing of India’s premier renewable energy agency, IREDA, via an initial public offer.
The move will help the non-banking finance company “increase its equity base which will help them raise more debt resources for funding renewable energy projects,” the government said.
IREDA supports the non-traditional energy sector by giving loans for setting up of rooftop solar installations, biogas plants, wind farms and other similar projects.
India has one of the most ambitious targets for boosting renewable energy production after China, which leads the world by a wide margin.
China is estimated to have around 90 GW of solar photovoltaic capacity, while India has around 15 GW. China added around 35 GW in the last year alone, while India will be adding around 10-15 GW this year.
However, in one of his first actions in the energy arena after taking over as Prime Minister, Narendra Modi increased the target for solar power capacity for the country from 22 GW by 2022 to 100 GW.
Including wind and other sources, the total capacity targeted is 175 GW.
However, with the United States backing away from the Paris climate change accord, some of the programs being planned in India may fall short of funding.
The listing of the IREDA, which stands for Indian Renewable Energy Development Agency, could be one way of overcoming the shortage.
Besides the money raised directly by selling its shares, the IPO will also help increase the money that the company can raise in the form of debt. Typically, banks and other organizations will have limits on how much they can lend to a company, that are based on the amount of money contained in the company in the form of share capital or equity.
A total of 13.9 cr shares of IREDA will be sold in the share market, which could raise around Rs 1000 cr or so.
“Such public issue will also enable it to unlock its true value and increase its visibility in domestic and international financial markets. IREDA, being the premier institution for RE Sector, will be required to raise equity funds to leverage loan financing for RE Sector,” the government said today.
The company was founded in March, 1987 and has played a crucial role in supporting and facilitating the policies and program of the Ministry of New & Renewable Energy.
IREDA has primarily worked with the private sector enterprises operating in the power sector.
For the last three decades, IREDA has been supporting establishment of renewable energy projects and has greatly succeeded in commercialization of sustainable energy technologies in the country, the government said.