Japanese bank betting big on Indian hydropower sector

March 9th, 2008 - 3:00 pm ICT by admin  

New Delhi, March 9 (IANS) The Japan Bank for International Cooperation (JBIC) is set to play a bigger role in the development of India’s hydropower sector with the government responding favourably to its request for identifying projects for possible financial assistance. According to the data available to the government, India has the estimated potential to generate 145,000 MW electricity from water resources, but it has utilised only 22 percent.

“Following JBIC’s request, we have started the process of identifying hydel projects for possible financial assistance from the multilateral agency,” said a senior official at the union power ministry.

“Key hydropower generators, including state-owned companies like National Hydroelectric Corp (NHPC) and Tehri Hydro Development Corp (THDC), have lined up proposals for consideration for JBIC funding,” the official told IANS.

“We have received proposals from NHPC to avail JBIC loans for its various power projects including the 3,000 MW Dibang and 1,500 MW Tawang in Arunachal Pradesh and 495 MW Teesta in Sikkim,” the official said.

“THDC has also approached us with proposals for JBIC funding for its 126 MW Jhelam Tamak and 55 MW Malari Jhelam projects,” the official added.

According to industry experts, lack of long-term and cheaper funding commensurate with the payback period of hydropower projects has constrained the government’s efforts to accelerate harnessing of hydrogenation potential.

The domestic bond market was too small to meet the fund requirement of hydropower projects, which had a normal payback period of 25-30 years, they said.

According to them, JBIC could provide not only long-term loans at very competitive interest rates to power projects but also offer cheaper financial solutions to manage attendant foreign currency risks.

The multilateral lender insists on strict adherence to its environment protection and procurement transparency norms in project implementation and so its involvement should work to boost confidence of other investors in financing of hydropower projects in India, the experts said.

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