April 7, 2017

Speaking at India-UK Energy for Growth Partnership ,2017 , New Delhi

Utilities of the future where distribution reforms and customer orientation was the identified priority for collaboration, and energy efficiency was the second theme on which both industrial efficiency and demand side management have been discussed. In the joint working group on new and renewable energy, three themes were discussed. Discussions were centered around renewable energy planning and deployment along with the states, and within that, of course, several programmes, government programmes, the solar park programme, integration into the transmission grid, the regulations around it were discussed.

The second theme was around decentralized energy scale up and sustainability, and the third theme was, and a very important pillar of this relationship, on financing for clean energy. We have already had a very successful masala bond raising by NTPC in London earlier in the year. Several companies in the energy space, including IREDA (Indian Renewable Energy Development Agency); EESL (Energy Efficiency Services Limited); NTPC has second round of fund raising, and even possibly REC and PFC are looking at raising masala bonds. Some of them are also looking at Green masala bonds being raised in UK, apart from our normal fund raising activities in London.

We have had some very good discussions around innovative financing models or financial instruments. And I must acknowledge and thank the support we have received from the UK government and other entities in UK in our plans in this direction. I have broadly estimated the current plans and believe the energy sector companies would probably be raising, all put together about a billion US dollars, in the London markets to fund our rapid expansion programmes in the next few months.

On an overall prospective, I must acknowledge and thank the great support we have received from the United Kingdom in our efforts to scale up our own energy plans in the country, particularly, the support we have received in terms of grid integration for our massive renewable energy programmes. We are delighted at the support that Minister Clarke has discussed with me in terms of an assessment of the various programmes that we are carrying out in India, and to help us assess the scalability and the technological up gradation of the various initiatives that we are doing in India.

I am also delighted at the progress that EESL (Energy Efficiency Services Limited), has made in its own international forays. They have set up office in London and they have already started investments, EESL has invested about £7 million in 7 energy saving projects in the UK after intense technical and financial due diligence. And we do have large plans to scale up our own engagement in UK, which Minister Clarke has welcomed. And that is the strength of the UK-India partnership where we are both working in a spirit of reciprocity and in a spirit of larger engagement both sides.

Thank you very much Minister Clarke for your visit. Thank you very much for the deep interest you and your business delegation have shown. In fact, it’s probably one of the largest delegations to come from UK, particularly, on the energy side it will be a first I would believe. I warmly welcome your delegation. Thank you for the interest you have shown in our programmes, and certainly look forward to more engagement and more visits from UK in the months and years to come. Thank you Minister.

Question and Answer

Q:Sir, you spoke about Indian PSU companies raising $1 billion in UK markets in masala bonds. How soon will we see this happening, in this financial year, or is there a timeline?

A: Well of course, these are independent companies, they take their own decisions. But from what indications came during the course of discussions, my own sense is, yes, within this financial year.

Q:Sir these bonds that will be issued, will they be used for renewable energy projects or for all energy projects?

A: As I said, if they are just masala bonds, they can be used both for renewable energy or for anything else. But the Green masala bonds, obviously, can only be used for renewable energy.

Q:This $1 billion will be mix or both?

A: Mix, could be anything, I mean that’s being still worked out by the companies and this is an estimate from what I could total up when people said what their plans are. The HDFC, NTPC, some of the companies which have already been in the market have found it very attractive. You must bear in mind, when a new product comes, when an innovative financial product comes, there’s a learning curve and there’s a yield curve which moves with the learning curve. So when the first bond is given out it’s always ‘it may cause’, there’s a lot of uncertainty, unsurely, we don’t know how it works. And during my visit to London, when I actually visited the London Stock Exchange also, this point came up that initially we were also worried, is the cost too high? Is it viable? That unless you do 4 or 5-6 offerings, you really can’t determine the right market price. They are also getting a feel we are a new country for that market. We are also learning the ropes. And as you know, this government doesn’t hesitate to take bold decisions. We believe that unless you wet… in the water, you are not going to really learn to swim.

And our own experience, take the UDAY bond, I will just take a minute. Uttar Pradesh took out two bond tranches in the last 3 or 4 months. The first tranche went at some price, the next tranche went at a lower price. My own suspicion is the third tranche will get even lower as the market starts understanding products better. So, we will be in the market continuously as our investment plans ….





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