October, 2018, Mumbai, India: IFC, a member of the World Bank Group, has extended a 7-year long-term loan of Rs. 1,000 crore to Aditya Birla Finance Ltd. (ABFL), the NBFC arm of Aditya Birla Capital Limited (ABC). ABFL is a well-diversified non-banking finance company (NBFC) with a long term credit rating of AAA from both ICRA as well as India Ratings. ABFL will use the proceeds to finance renewable energy projects and help the country move towards its target of 175 GW of renewable energy capacity by 2022.
The IFC green loan, sanctioned in March 2018, is an Indian rupee loan under Track III of the Reserve Bank of India’s guidelines for external commercial borrowings.
India’s power sector is one of the largest in the world, but the country’s per capita consumption of electricity is less than a fourth of the global average. The government wants to provide electricity 24×7 to the entire country by 2019, while minimizing the impact on the environment. For that, it plans to increase the renewable energy capacity to 175 GW, comprising solar, wind, biomass, and small hydro, by 2022.
“We are delighted to partner with IFC, with which we have a very good relationship. This is not just about a loan but also about being able to access the expertise that IFC has in this area and together making a small difference to the energy requirements of our country,” said Mr. Ajay Srinivasan, Chief Executive of Aditya Birla Capital.
With this funding, IFC will help ABFL develop its renewable energy program by providing longer-tenor financing, knowledge sharing, and setting of standards. IFC brings to the partnership its deep understanding of the renewable energy sector.
“India is yet to have its entire population covered by 24X7 electricity, which is a critical development gap we want to help bridge in a manner that is friendly to the environment. Aditya Birla Capital’s business mix and market presence are aligned to our priorities and we consider the company a potential strategic partner in development,” said Jun Zhang, country head, International Finance Corporation, India.
The project complements IFC’s India Country Strategy for FY2017-2021, which commits to enabling electricity access for 60 million people, creation of 25 GW of installed renewable capacity, and contributing 11 percent to the total energy-related greenhouse gas avoidance potential.