Indian power generation firm Tata Power Co. is planning to raise up to $1 billion for clean energy projects, potentially making it the largest local currency loan in India this year. Tata Power, a unit of Tata Group, one of India’s largest conglomerates, is currently in talks with several lenders, including State Bank of India, IndusInd Bank, Axis Bank, and ICICI Bank.
Loan to Fund Clean Energy Investment
The loan proceeds will be used to fund Tata Power’s investment of $1.6 billion, which was announced in August, to develop clean energy projects utilizing pumped hydro storage. This investment is part of India’s goal to nearly triple its green power capacity by the end of the decade. Tata Power, along with other companies like Adani Green Energy Ltd. and Reliance Industries Ltd., is actively expanding its renewable generation capacity.
Potential Record-Breaking Loan
If Tata Power’s planned borrowing reaches anywhere near $1 billion, it would surpass the largest local currency loan recorded in India this year, which was Assam Bio Refinery Pvt.’s deal of $365 million in February.
Loan Structure and Timeframe
The loan may be structured as a bilateral loan or a clubbed facility. Tata Power expects to finalize credit lines with lenders within the next three to six months. Disbursements will occur in tranches based on project development. The loan may be priced using local gauges such as the Reserve Bank of India’s repo rate or treasury bills.
Ongoing Negotiations
Negotiations for the loan are still ongoing, and details of the deal may change. Tata Power and the banks involved have not provided comments regarding the matter at this time.
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