JICA extends loan of Rs 3,500 cr for energy sector

The assistance will promote renewable energy generation and efficient energy use in MSMEs

Japan International Cooperation Agency (JICA) on Monday signed agreements with the Small Industries Development Bank of India (Sidbi) and the Indian Renewable Energy Development Agency Limited (Ireda) to provide official development assistance (ODA) of 30 billion Japanese Yen (Rs 1,750 crore) each to the two institutions to enhance energy availability in India.

ODA is a development assistance programme run by Japan to provide monetary help, infrastructure, emergency assistance, and public facilities to developing countries.

The agreement was signed by Shinya Ejima, chief representative, JICA India with N K Maini, deputy managing director (in-charge), Sidbi and with K S Popli, chairman and managing director, Ireda. The assistance will further financial savings through efficient energy use and expand use of renewable energy to reduce dependence on fossil fuels. The energy supply and demand gap in India has caused frequent power outages and is considered one of the impediments to India’s economic growth.

In a press statement issued on Monday, JICA said it has been supporting India’s efforts towards mitigating energy shortage by focusing on developing infrastructure such as more efficient technology for power plants, transmission systems and distribution networks, and increasing efficient use of energy, especially in micro, small and medium enterprises (MSMEs).

JICA’s assistance will enable medium-to-long term funding to private and public companies engaged in energy saving and renewable energy development.

Since 1988, JICA has provided 200 billion Japanese Yen to Sidbi through eight loan agreements to facilitate development of MSMEs. The current agreement with Sidbi is the third phase of JICA’s assistance focusing on efficient energy use. The project - Micro, Small and Medium Enterprises Energy Saving Project (Phase 3) - will help Sidbi fund MSMEs invest in energy-efficient facilities; it will help achieve the goal of 20 per cent improvement by 2017 in MSMEs’ energy efficiency.

In India, MSMEs account for 45 per cent of the output of manufacturing sector and 43 per cent of exports and contribute substantially to employment generation. JICA’s assistance to Ireda is the second, following a 30 billion Japanese Yen assistance extended in 2011.

The project, New and Renewable Energy Development Project (Phase 2), aims at supporting power producers to invest in new renewable energy projects such as wind and solar power through Ireda.

India is fourth in the world in terms of installed wind power and the project will contribute to the investment required to develop clean energy sources, particularly solar power.

“These new loan agreements are aiming to provide comprehensive support to ensure stable energy supply and diversify energy resources. Since Japan is one of the most energy-efficient countries, Japan’s knowledge will contribute to achieving the goal,” said Ejima.