IFC to invest $500 million in Indian infrastructure

With focus on renewable energy, total investments to cross $1 billion in 2010-11.

International Finance Corporation (IFC), a unit of the World Bank, plans to invest $450-500 million in Indian infrastructure projects this year. These investments will be made through a mix of project finance, corporate finance and debt instruments.

“In the last financial year, IFC invested about $440 million in 15 projects across infrastructure and natural resources sectors in India. We expect to achieve or exceed these numbers in 2010-11 (July 2010 to June 2011),” Luc Grillet, portfolio manager, infrastructure cluster, East and South Asia, IFC, told Business Standard.

IFC said its total investments in India would cross $1 billion in 2010-11. IFC has interests in sectors like financial markets, agri-business, manufacturing, chemicals, health and education.

The organisation plans to maintain its focus on renewable energy and climate change investments. Last year, it invested around $100 million in seven clean energy projects. IFC has plans to increase the number of investments in clean energy, particularly in solar, wind and small hydro.

IFC said since around two-thirds of Indian renewable energy sector was dominated by wind power, it would look at increasing its share in solar power and biomass projects. Last year, it had invested $10 million in Azure Power, the country’s first grid-connected solar independent power producer. It has also made a combined debt and equity investment in Applied Solar Technologies. It has given debt and equity support to hydro and biomass projects of Aura Mira Energy.

IFC also eyes investment opportunities in natural gas-based power projects, water and wastewater projects, port projects, warehousing and logistics. “Natural gas is a clean fuel and it is a priority for us. We will look at projects which use natural gas as a feedstock. We will also make investments which will help augmenting LNG (liquefied natural gas) import capacity, natural gas transmission and distribution like, pipeline projects,” said Grillet.

As part of its inclusive growth strategy, IFC will also look at funding rural electrification projects. It will also fund projects like upgradation of electricity transmission network and information technology implementation projects, which intend to reduce transmission and distribution losses.

It will invest in semi-government-owned companies, as this sector is largely controlled by state-owned utilities. Last year, it lent and helped to arrange a $100-million loan to finance Maharashtra State Electricity Transmission Company’s capital expenditure programme.

The organisation also has a region-wise focus for investments. “Our inclusive growth strategy means that we are trying to pay more systematic attention to states like Rajasthan, Bihar, Orissa, Jharkhand, Madhya Pradesh, and the north-eastern states.”