Govt may turn to FIs to restart stalled biomass projects

Seeking to revive stalled biomass power projects, the government is looking to rope in financial institutions to extend funds to developers of such plants.
A number of biomass power projects are stuck due to multiple hurdles, including high costs and regulatory issues. Revival of such plants would give a fillip to the government's ambitious plan of 175 gw of clean energy generation by 2022.
The government is implementing a project assisted by the Ministry of New and Renewable Energy (MNRE)-UNDP/GEF on 'Removal of barriers to biomass power generation in India'.
"In order to overcome some of the difficulties faced by the biomass power plants to some extent and improve the viability of the above projects, it is proposed to use the funds from MNRE-UNDP/GEF Biomass Power Project for refinancing of their loans outstanding at concessional interest rates," the MNRE Ministry said.

"The scheme to be implemented will be known as the MNRE-UNDP/GEF Biomass Power Project Refinance Scheme for revival of existing biomass projects affected due to unforeseen circumstances," the ministry added.
Funds availability for the scheme is approximately Rs 15 crore, it said.

It's also proposed that the support will be provided to those biomass projects where there is a possibility of revival within a short period of time.
"Interested banks/FIs (financial institutions) may submit their proposals for refinancing," the ministry said.
As of March 31, 2015, grid-connected biomass power plant capacity stands at 1,410 mw.
Many biomass projects in the recent past have been hit by uncertainty in policy and regulatory matters, including low tariffs, higher wheeling and banking charges, cancellation of power purchase agreements (PPAs), higher transmission and cross-subsidy charges, in addition to abnormal escalation of biomass fuel costs.

The project viability and ability to repay the loan have also taken a beating.
"In order to overcome these difficulties to some extent and improve the viability of the above projects, it's proposed to use the funds of about Rs 15 crore from MNRE-UNDP/GEF Biomass Power Project for refinancing of their loans outstanding at concessional interest rates," it said.