Tata Power to Raise Largest Local Currency Loan to Develop Renewable Energy Projects

Tata Powe reportedly plans to raise as much as USD 1 billion in loans to develop renewable energy projects. According to Bloomberg, this move could result in the country's largest local currency loan this year. This year, India’s largest local currency loan was Assam Bio-Refinery Pvt.’s deal of USD 365 million in February. Once finalized, the Tata power deal could be India’s largest local currency loan. 

The Tata Group company is already negotiating with lenders, including the State Bank of India, IndusInd Bank, Axis Bank, and ICICI Bank, for the loan. The loan proceeds will fund the company's investment of USD 1.6 billion, announced in August, to develop some renewable energy projects in India.

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This initiative comes when India aims to nearly triple its green power capacity by the decade's end. Firms, including Tata Power, Adani Green Energy Ltd., and Reliance Industries Ltd., are ramping up efforts to meet this target. Tata Power is targeting a near four-fold growth in its renewable generation capacity by 2027.

The deal may be a bilateral loan or a clubbed facility. The company expects to finalize credit lines with lenders in the next three to six months, after which disbursements will take place in tranches depending on project development. The loan may be priced over local gauges, such as the Reserve Bank of India's repo rate or Treasury bills.

Key Objectives

Tata Power’s strategic move has several key objectives, such as:

Expansion of Renewable Energy Portfolio: Tata Power aims to quadruple its renewable generation capacity by 2027. The loan will provide the necessary capital to fund this ambitious expansion plan.

Investment in Pumped Hydro Storage Projects: A significant portion of the loan will fund the company's USD 1.6 billion investment in pumped hydro storage projects. These projects are crucial for storing and managing the intermittent power generated by renewable sources.

Supporting India's Green Energy Goals: India aims to nearly triple its green power capacity by the end of the decade. Tata Power's investment in renewable energy projects will contribute significantly towards achieving this national goal.

Competitive Advantage: Tata Power is positioning itself as a leader in the Indian renewable energy market. This could give the company a competitive edge to become one of India's largest renewable energy companies.

Read: Avaada Energy Secures a Major Solar Power Project in an NTPC Auction

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