The Cabinet Committee on Economic Affairs (CCEA) and the Union Cabinet held a meeting on January 19, where the former approved equity infusion worth Rs 1,500 crore in the Indian Renewable Energy Development Agency (IREDA)Limited.
The union cabinet held a press conference later in the day to announce the development and explain how the equity infusion would help IREDA to loan Rs 12,000 crore to the renewable energy sector. Besides, it would also help the renewable energy development agency to enhance its net worth and in turn provide additional financing to the renewable energy sector.
The Centre further explained that this move will improve the capital-to-risk weighted assets ratio to facilitate its lending and borrowing operations, while also enabling “employment generation of approximately 10,200 job-years."
The equity infusion in IREDA will also help reduce emissions of around 7.49 million tonnes of carbon dioxide equivalent per year.
The Modi government had announced in Budget 2021 that the equity infusion of Rs 1,500 crore would help IREDA extend its loan facility by Rs 12,000 crore over and above its existing book size of Rs 27,000 crore, while also improving its capital adequacy. This would help it borrow at a lower interest rate, thereby lowering the rates of interest for developers as well.
Per the 2021 Budget announcements, this equity infusion would also help IREDA in financing nearly 4,500 MW of renewable energy projects worth Rs 18,000 crore approximately.
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