In a programme started last month and to run through to September, interest rates for foreign loans administered by IREDA have been cut by 1%, says the agency's Dr V Bakthavatsalam, and are down to 15.5%. The aim is to "push up" sluggish borrowing for wind projects, he adds. At the same time, loans can be granted against 75% of technology equity, compared with a previous 60%. The pay back period has been extended from eight to ten years, IREDA expects its initiatives to result in the installation of 75 MW of new capacity by next March, the end of India's fiscal year.
Meantime, lines of foreign credit are also starting to flow again through the IREDA conduit, with some $65 million now available. The expiry last year of a $28 million loan, sanctioned by the World Bank in 1992-93 for wind development, left a dearth of cash for project financing. Now, however, IREDA is administering $15 million from Danish overseas aid agency DANIDA (of which $4 million has been used); $60 million from the Asian Development Bank; DEM 60 million ($34.8 million) from Germany's overseas development bank, the Kreditanstalt für Wiederaufbau; and NLG 30 million ($15.3 million) promised by the Dutch government for wind, of which NLG 8 million has been used.
IREDA also raises money in India for financing wind development through issuing tax free bonds, encouraging equity participation from the government and loans from financial institutions.
The wind industry has frequently complained that IREDA's rates of interest are too high, but Bakthavatsalam insists they are not. "Our interest rates have always been low," he says. But referring to the unease felt by some at the whirlwind pace of wind development in the past, he says: "Anything that rises too fast gets noticed and becomes an eyesore." IREDA will review its new terms and conditions for loans at the end of September on the basis of "market development and reaction," says Bakthavatsalam.
The agency is also trying to meet industry demands that IREDA open regional offices, or at least an office in Chennai, close to where most of the major companies are based. "Distance should not be an impediment. We have to be lean and cost effective. Today, because we have reduced our overheads, we have been able to pass the savings down through the industry," counters Bakthavatsalam. He assures, however, that IREDA will have a fully fledged office running in the south during the ninth Five Year Plan (1997- 2002) and is considering a total of four regional offices.
Commenting on the market, Bakthavatsalam says: "India is presently going through a period of self evaluation. People are taking a cautious approach." He attributes the sudden bouts of haphazard growth in the wind sector partly to improper planning. "What will happen ultimately is that sanity will prevail. This will, of course, lead to a sound, steady market with fly-by-night operators having gone with the wind," he assures.