REC getting new €100 mn loan from KfW Bankengruppe

Rural Electrification Corp. Ltd (REC) is set to raise €100 million (Rs.656 crore) from Germany-based KfW Bankengruppe for financing renewable energy projects in India at concessional interest rates.

The loan agreement is to be signed and all the formalities have been finalized.

REC had earlier availed a loan of €140 million through two rounds of funding of €70 million each from KfW Bankengruppe.

REC has sanctioned loans worth Rs.50,000 crore and disbursed loans estimated at around Rs.25,000 crore in the current fiscal.

REC is borrowing from a foreign lender to tide over the acute shortage of funds facing power companies in India. Also, funds raised from global markets are cheaper, given the high interest rates in India, said Sharma.

India’s power sector, already struggling with funding shortfalls, will need $400 billion of investment during the 12th Five-Year Plan (2012-17)