India’s NTPC signs $ 482 million loan deal with Japan for renewable energy expansion


India’s largest energy conglomerate NTPC Ltd has entered into a foreign exchange loan agreement with the Japanese government financial institution, the Japan Bank for International Cooperation (JBIC).

JBIC has issued 50 billion yen (approximately $ 482 million) in funding as part of the Global Action to Reconcile Economic Growth and Environmental Conservation (GREEN) initiative.

JBIC will finance 60% of the loan amount and Japanese commercial banks will finance the rest under its guarantee. These banks include Sumitomo Mitsui Banking Corporation, Bank of Yokohama Ltd., San-In Godo Bank Ltd., Joyo Bank Ltd. and Nanto Bank Ltd.

The facility is being extended as part of JBIC’s outreach for projects, which ensures global environmental conservation. NTPC Ltd will use the proceeds of the loan to finance its capital expenditure (CAPEX) for flue gas desulphurization (FGD) and renewable energy projects.

Flue gas desulfurization is a process of removing sulfur dioxide from the exhaust flue gases of fossil fuel power plants and sulfur oxide emissions from processes such as waste incineration.

FGD significantly reduces sulfur dioxide emissions released into flue gases from thermal power plants and is a critical step towards environmental sustainability.

In February 2019, the Department of Energy proposed an 835 billion yen ($ 11.70 billion) plan to cover the cost of developing flue gas desulfurization (FGD) to improve the quality of air and comply with the new standards notified by the Ministry of the Environment, Forests and Climate. Change (MoEF & CC) for power plants. Even during her 2020 budget speech, the finance minister said old thermal power plants would be asked to shut down if their emissions were above pre-set standards.

Later in January 2020, the Prime Minister’s Office also recommended waiving the Goods and Services Tax (GST) (previously known as the Clean Energy Cess, which was India’s version of the carbon tax) on coal in order to reduce the financial pressure on distribution companies, in addition to helping thermal power plant projects to install FGDs to fight against pollution.

In September, the Central Electricity Regulatory Commission (CERC) also released a staff paper on the issue of the compensation mechanism and tariff implications for the modernization of pollution control equipment in thermal power plants.

Director (Finance), NTPC, Anil Kumar Gautam, and Managing Director, Global Head of Infrastructure and Environment Finance Group, JBIC, Tanimoto Masayuki, signed the funding agreement via video conference.

Earlier this year, NTPC raised a syndicated loan worth $ 750 million in Japanese yen to fund capital expenditures for the installation of flue gas desulfurization systems. NTPC said the loan was lifted under the automatic channel of Reserve Bank of India (RBI) External Commercial Borrowing (ECB) regulations and was fully guaranteed by the State Bank of India, Tokyo; Sumitomo Mitsui Banking Corporation, Singapore; and the Bank of India, Tokyo.

In 2018, India and Japan signed a pact to enable the establishment and promotion of closer and long-term cooperation among countries in the field of environmental protection and resource management. natural.


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