Waste-to-energy projects: Banks taking a guarded approach

Biofuel Word Indicating Green Energy And Biofuels

Moneycontrol News

Although the Centre has prepared and planned a policy to boost the use of bio-fuels, most enterprises have been concerned over funding difficulties for waste-to-energy projects. Even banks have maintained a cautious and guarded approach over funding these power projects, especially in new sectors such as bio-fuels.

According to a report in The Hindu Business Line, typical investment for a waste-to-energy plant comes around ₹9-15 crore per megawatt as per the current industry evaluation. Looking towards the reluctance from the banks, the private players have started exploring other funding avenues such development finance institutes such Power Finance Corporation, besides overseas investors such as venture capitalists (VC Funds) and companies, who have already implemented similar projects in other countries.

Last month, the Centre approved the national policy on bio-fuels, which was aimed at enabling appropriate financial and fiscal incentives to the sector. The whole motive was in order to meet the aspiring and the challenging target of employment generation and waste to wealth creation.

“The sentiment is uncertain in the banking circles, especially about clearing of the loan proposals of new projects”, said a senior official at a public-sector lender and also added, “the power generation from biomass and bio-fuels is a new area and unproven at present. Hence, there is certainly a hesitation from the banks."