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India

India

AID AND LOANS ON THE WAY, Finding the Cash

With orders for hundreds of wind turbines in place but no one to pay for them, India is still writhing uncomfortably under its dearth of cash. But a solution could be at hand. There may be no domestic financing, but if a recent meeting between the Indian Renewable Energy Development Authority (IREDA) and the wind turbine manufacturers association is any indication, a series of international agencies are anxious to sustain the industry.

Although the $28 million line of credit from the World Bank, which included funding from the bank's Global Environment Facility (GEF) and International Development Agency, is now exhausted, other cash is on its way in the form of Danish and German aid as well as American (Windpower Monthly, March 1996). At the same time a $65 million loan from the Asian Development Bank (ADB) is expected to be available this month or next.

Conditions attached to the ADB loan will be the same as those for the World Bank, but IREDA is still discussing the interest rate. Observers say this could be increased from the World Bank's previous 14.5% to 18%, in line with commercial lending rates. With interest rates soaring, exchange rates fluctuating and aid lending rates under the microscope "IREDA's attitude is not helping," comments one.

The $15 million granted to wind by Danish aid agency Danida is tightly tied to Danish technology; 50% of contract value must be of Danish origin. The remaining 50% can be Indian or from a third country, but 30% of the total must not exceed supplies from third countries. These conditions have irritated much of the industry along with a DKK 5 million minimum limit on a contract's.

From Germany the national development bank, KfW, is expected to release $50 million in September, though its procurement conditions have yet to be finalised. A KfW representative was heard to remark, though: "Utilise this and there's plenty more for wind energy." Unlike Denmark, it is anticipated the Germans will not tie their aid to German technology.

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