The KfW, a German financial institution, has signed loan agreement worth Rs 16 billion (Euro 200 million) with Rural Electrification Corporation Limited (REC) for funding renewable energy project developers in the form of low-interest loans. KfW has signed the agreement on behalf of German Federal Ministry for Economic Cooperation and Development (BMZ).
The funds will be utilised by REC to provide low-interest loans to private sector renewable energy project developers. These loans will be supplemented by counterpart contributions of up to 30 per cent from the borrowers as well as contributions from other banks. KfW funds will provide a credit line for 200 MW of capacity, saving up to 285,000 tonnes of carbon emissions each year and the projects will help supply power to around 270,000 homes. The bank will also provide a complementary grant of Rs 82.43 million (Euro 1 million) to implement an environmental and social management solution. The overall investment is expected to be around Rs 22.85 billion (Euro 285 million) and is a part of the German-Indian solar partnership.