UDAY scheme can be model about massive rotation of capital: Michael Eckhart

NEW DELHI: The UDAY scheme (Ujjwal Discom Assurance Yojana) started by the Ministry of Power in 2015 could be a model for the rest of the world, global bankers participating in a panel discussion on renewable energy felt. “I applaud this initiative which brings about massive rotation of capital,” said Michael Eckhart, Managing Director, Global Head of Environmental Finances and Sustainability at Citibank. Under UDAY, state government underwrite loans taken by their discoms, thereby increasing their creditworthiness.

The discussion, on ‘Bankers’ perspective on renewables’, moderator by former Chairman of State Bank of India, Arundhati Bhattacharyya, and part of RE Invest 2018, currently being held in Delhi, saw bankers express both appreciation of, and reservations about, India’s renewable energy programme. Apart from UDAY, the setting up of solar parks across the country also drew praise. “The solar park model has worked well,” said Rohit Khanna, Manager, Global Energy Programmes at World Bank.

Rapidly dropping tariffs of renewable energy, both solar and wind, however, has caused some worry among bankers. “We have seen that some of the assumptions made by developers have proved incorrect,” said Ajeet Kumar Agarwal, Director (Finance), Rural Electrification Corporation (REC). “What factors are taken into account while quoting low tariffs? Is rupee-dollar volatility considered?” Eckhart of Citibank feared the low tariffs could lead to a wave of project bankruptcies. Chinmoy Gangopadhyay, Director, Projects, Power Finance Corporation, also questioned the quality of solar panels used in some projects. “There is no benchmark,” he said.