IFC to back Mahindra Renewables to develop solar park in MP

Mahindra Renewables Private Limited (MRPL), a 100 per cent subsidiary of Mahindra Susten Private Limited plans to develop a solar park in Madhya Pradesh that will be backed by the International Finance Corporation (IFC).

The estimated project cost is around Rs 12.8 billion. The proposed IFC investment involves a loan of up to Rs 3.2 billion and a potential mobilisation of Rs 6.4 billion from other lenders. Proceeds from the IFC investment will be used by the company for the construction of the project.

MRPL has been granted a 250 MWac solar power project within the 750 MWac Rewa Ultra Mega Solar Park in the Rewa district of Madhya Pradesh. The solar park is being developed by Rewa Ultra Mega Solar Limited (RUMSL), a joint venture between Madhya Pradesh Urja Vikas Nigam Limited (“MPUVNL”)  and the Solar Energy Corporation of India (SECI).  Madhya Pradesh Urja Vikas Nigam Limite is a state government agency.

The project is expected to be commissioned by December 2018. The off-takers for it will be Madhya Pradesh Power Management Company Limited (MPPMCL) and Delhi Metro Rail Corporation (DMRC).

The government of Madhya Pradesh appointed IFC as the lead transaction advisor to enable RUMSL and GoMP to facilitate the entire private investment for the Rewa Solar project. IFC's role includes advising  and identifying the project structure.The corporation upon request will help implement solutions for key commercial, legal, regulatory, technical and system operations related issues. It will also design a transparent auction process to help select private entities to develop the units in the Rewa Solar project.

IFC said that it will provide long tenor fixed rate local currency financing with a debt repayment profile that matches the cash flows of the project. The long-lived nature of the assets is being financed. The World Bank's investment arm will also play a catalytic role in arranging additional finance. IFC will mobilise a significant portion of the debt for the project. IFC's global expertise in financing renewable energy projects and sector knowledge will make the project easier.

The solar park is located across five villages, namely, Badwar, Barsaita Desh, Barsaita Pahad, Etar Pahad and Ramnagar Pahad under Gurh Tehsil in Rewa District, MP. The solar park is equally divided among three units, each of which will have a 250 MWac solar power plant. MRPL has won project development rights for Unit I of the park.

The project will help in achieving  the government's Intended Nationally Determined Contribution of reducing the emissions intensity of its GDP by 33 to 35 percent by 2030 from 2005 levels. It targets to reach about 40 percent cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030.