Behind the scenes: What led to Cyrus Mistry ouster

The creation of the Group Executive Council (GEC) as Mistry’s main brain trust had upset many in Tata Sons who perceived it as a parallel power centre.

MUMBAI: It was a sombre Sunday.

A day before the Tata Sons board met on Monday, Harvard Business School dean Nitin Nohria met Cyrus Mistry for more than two hours where he conveyed a message from Tata Trusts Chairman Ratan Tata about what might come up for discussion at the meeting.

On Monday evening, the Tata Sons board’s announcement took everyone by surprise, but the die had been cast some months ago. On August 26, the board was expanded by inducting Piramal Enterprises Chairman Ajay Piramal and TVS Motor Chairman Venu Srinivasan. The appointments were seen as a move to tighten the grip of Tata Trusts over the Tata Sons board chaired by Mistry.

Sources said Mistry was not even consulted on these appointments, reflecting the simmering discontent between Tata Trusts and the chairman.

The philanthropic trusts — including the larger ones like Sir Dorabji Tata Trust and Sir Ratan Tata Trust — together control about 66% of Tata Sons, the group holding company that was created by the families of the sons of founder Jamsetji Tata, and are still largely under the family’s grip.

This in many ways was payback time, felt Tata Group watchers. Just two months ago, in June, Mistry had cleared Tata Power’s $1.4-billion acquisition of Welspun’s solar farms without seeking approval from either Tata or other key shareholders.

“Tata Power is a cash guzzler but generates very little profit. Yet, when it’s embarking on its biggest buyout, a principal shareholder is kept in the dark. That’s unprecedented in Bombay House (Tata Group headquarters),” said an old-time group insider.

In 2011, when Ratan Tata cherry-picked Mistry, it was seen as the victory of youth. “Be your own man”, was Tata’s advice to his then 43-year-old successor.

But soon, youth was perceived as insolent, precocious and out to destroy “the core values that the group stood for, for close to 148 years.”

Take, for example, the centenary celebrations of Shapoorji Pallonji two years ago. According to a leading industrialist, while everyone from India Inc was invited to the event at the National Centre for the Performing Arts, Ratan Tata was not to be seen. He was, in fact, dining at Thai Pavilion with Cyrus’ first cousin. To many, it looked odd, since Tata should have been a part of the celebrations.

There was a fundamental disconnect between Mistry and Tata, particularly with regard to ethos, values, vision and the direction that the group was headed in. Detailed letters were sent to Mistry asking him to spell out his vision, five-year plan, etc, but the responses were vague and non-specific. Things got aggravated as the chairman of Tata Sons and Tata Trusts were not the same individual. The former was not a Tata family member but represented the single largest shareholder while the latter was custodian of a century old legacy. “Confrontation was inevitable,” felt a Mumbai based CEO of a global investment bank who has been working closely with the Tata Group for over two decades.

Several of Mistry’s decisions, including the disposal of some of Indian Hotels Co’s overseas properties and especially the move to shut the UK steel operations, did not go down well with Tata Trusts. Many were considered Ratan Tata’s legacy that helped the group revenues top $100 billion even if it left the group hamstrung with ballooning debt burden. Mistry’s war on the legacy of the old guard, and the comment about the necessity of ‘tough love’ within the organisation was considered overtly aggressive and unnecessary.

Tata Trusts were of the view that the group under Mistry had not been able to take into account the sensitivity of shareholders as well as the global ecosystem in which the group companies operate. “Tata Steel could have been handled better and blunt decisions could have been avoided,” a person close to the development said. The move to shut the UK steel business had come in for heavy criticism in Britain.

“Tata was unhappy with the decision to shut down or sell the group’s steel business in Europe,” said a person close to Tata. “He wanted the group to turn around the loss-making business rather than sell it.”

Similarly, the decision to get embroiled in a high-decibel, full-blown legal battle with NTT Docomo and challenge the $1.2-billion international arbitration court’s order that went against it was seen as breach of faith by many Tata old-timers. “Tata had made a promise to Docomo that he’ll protect their investment in India. Come hell or high water, it would have been fulfilled. It’s about the spirit over subject here,” added another old Tata executive on condition of anonymity. Matters had come to such a pass that Tata himself met the Japanese ambassador to India in Mumbai in August, requesting a diplomatic intervention. But his efforts were scuppered by Mistry’s continued belligerent stance.

Tata’s sub-scale telecom operations are a classic case of Mistry’s centralised micro-management, a direct fallout of which was the collapse of negotiations with Vodafone, even after the senior leadership from both sides got personally involved.

Mails to Tata Sons, Nitin Nohria and Lord Kumar Bhattacharyya did not generate a response.

The earliest signs of strain between Tata and Mistry were evident when he sacked Indian Hotels managing director Raymond Bickson in 2014. Bickson, perceived to be close to Tata , was replaced with Hyatt veteran Rakesh Sarna. Matters worsened when Mistry continued with Sarna despite alleged complaints against him.

“Mistry’s eye for talent is also being questioned. The people he has hired are not inspirational leaders, just individuals,” said a former Tata Motors executive. But the crucial post of the Group CFO remained vacant for almost 3 years after the retirement of Ishaat Hussain.

The creation of the Group Executive Council (GEC) as Mistry’s main brain trust had upset many in Tata Sons who perceived it as a parallel power centre. Only a handful of its members had actual operational experience of running a business. Most of Mistry’s key advisers, including Madhu Kannan, NS Rajan, Nirmalya Kumar, were also shown the door along with him.

Mistry’s critics point out that he did not relinquish his Irish citizenship though as Tata Sons chairman he should have. Concerns were also voiced about conflict of interest regarding award of contracts to construction companies of the Shapoorji Pallonji Group even after Mistry took over. This, many feel, gave more ammunition to Tata Trusts to strike back.

At a stormy Tata Sons board meeting on Monday, other than Ishaat Hussain and Farida Khambata who abstained, the rest voted for the chairman’s ouster. Mistry himself voted to stay. But since early afternoon, WhatsApp messages to senior Tata employees talked of a big-bang announcement. Meanwhile, most of the Group Executive Council members abruptly left an in-house event, adding to speculation, said company officials.

“But in the end it was a coup that was planned to perfection and executed to the tee,” quipped an old Tata hand.

(Additional reporting by Devina Sengupta, Rica Bhattacharyya & Sneha Shah)

Government promulgates rules for right of power consumers

NEW DELHI: The government has promulgated rules for rights of electricity consumers which provide for penalties upto Rs 1 lakh on distribution companies for gratuitous load shedding and delay in grant of new connection or addressing a faulty meter.

Power minister R K Singh said that these rules shall empower the consumers of electricity. “These rules emanate from the conviction that the power systems exist to serve the consumers and the consumers have rights to get the services and reliable, quality electricity,” he said.

Distribution Companies across the country are monopolies – whether government or private – and the consumer has no alternative, Singh said. Therefore it was necessary that the consumers’ rights be laid down in rules and a system for enforcement of these rights be put in place.

The key areas are covered in the Electricity (Rights of consumers) Rules are release of new connection and modification in existing connection, metering arrangement, billing and payment, disconnection and reconnection, reliability of supply and compensation mechanism.

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Visibility on returns, R&D must for green push

The Economic Times brought together top CEOs and a top policy maker to discuss whether India can become a manufacturing hub in renewable energy. Panellists felt India can achieve its goal if manufacturers have clear visibility on returns on investment and make enough money to invest in R&D. Edited excerpts:

Mr Gujjari, Do you think India can become self-reliant in the wind sector, and what policy and regulatory support does the sector need?

Phani Gujjari, head of operations, LM Wind Power India: The area where we’d like to improve further in terms of atmanirbhar is on raw materials. Supply chain is an area where we are still dependent a lot. We aren’t very diversified and a lot of imports are from certain countries. That’s an area we would like most help on. In terms of what can be done, one is productivity. I see productivity as a skill and productivity tools as two things. In productivity tools, I want to appreciate the government programme of the science engineering and research board. The way I look at it is our tier-one supplier, our tier two supplier, there is a big gap in the skill level of say the big firms and mid and small firms. The other area is that even if we get our suppliers localised, we still have a huge part of our raw material imported. So, I think tier two, tier three localization — a lot has to be done.
Visibility on returns, R&D must for green push

Unless manufacturers see a 5-10 year runway where they can complete at least one full cycle of investment… we won’t have a manufacturing plantRanjit Gupta, CEO, Azure Power

Mr Gupta, the vision which the government has for the solar sector, with the support of the PLI scheme — can we really do it?Ranjit Gupta, CEO Azure Power: Given the vision of the Prime Minister of being 450,000 MW of capacity of renewables… we’re looking at $2 billion investment in equity and $2-3 billion debt. When you start manufacturing it is going to be slightly more expensive than China. We have labour issues, logistics issues, tax issues, electricity cost issues, cost of capital issues, cost of equity issues. But once we have scale, many of these things will go away. And for scale, for at least for the next 4-5 years, we need a situation where manufacturers can see that investing $2 billion will get them returns. Unless and until manufacturers see a 5-10 year runway where they can complete at least one full cycle of investment where they invest, build capacity, sell in the market, generate a return and return money to the shareholders, unless that kind of clarity is available we can have a lot of expressions of interest, but we won’t have a manufacturing plant on the ground.
Visibility on returns, R&D must for green push

India’s got about 10 GW of solar module assembly but all those operators are importing everything from ChinaSujoy Ghosh Vice President, APAC and India region, First Solar

Mr. Ghosh, what is your take?

Sujoy Ghosh, vice President, APAC and India region, First Solar:

In the solar industry, 90% of the global supply chain is in China. They built it by having a feed-in tariff mechanism where revenue certainty was provided to the investors and across the value chain, which is why today you see, the largest EPC companies in the world are all from China. In India, the whole manufacturing of wind flourished in an era where wind had a feed in tariff. We’ve had a reverse bid mechanism being adopted for solar. Yes, it has driven the cost of energy down to the consumer, but there are several question marks on quality and reliability of the assets, and the ability to produce power over 25 years. If you scan the market, India’s got about 10 gigawatts of solar module assembly but all those operators are importing everything from China because unfortunately, they are not able to meet the cost position which is offered from imported alternatives.
Visibility on returns, R&D must for green push

We need to have a crystal clear manufacturing policy, which we don’t have right nowSaibaba Vutukuri CEO, Vikram Solar

Mr Vutukuri, what would you like to say. Can India become self reliant?Saibaba Vutukuri, CEO Vikram Solar: In the last 10 years, we’ve done exceedingly well. We’ve installed from practically zero to 35 GW and invested Rs 1.75-2 lakh crores. If we see what is the kind of subsidy given for building generation capacity, it’s about Rs 40,000-50,000 crore. China on the contrary has invested $4 billion or $5 billion and captured global markets. I’m happy the government started looking at it. The initiatives are very good, but absolutely insufficient. We need to address two three points. One is cost differential between China and India, which is close to about 30%. We talked about BCD in the last six, seven months. Unfortunately, we have not brought in BCD at all. Tariff and non-tariff barriers have to come in. We need to have a crystal clear manufacturing policy which we don’t have right now.
Visibility on returns, R&D must for green push

We will continue with our efforts to protect and nurture the Indian industry, that is the major mandateGuruprasad Mohapatra, Secretary, DPIIT, GOI

Mr Mohapatra, would you like to respond to these issues?

Guruprasad Mohapatra, Secretary, DPIIT:

We can provide incentives such as PLI schemes. Various states also have their own schemes. Then, we can provide tariff and non-tariff barriers. In 24 sectors that our ministry is spearheading in coordination with other ministries, if there is no PLI or any other direct incentive, definitely protection measures need to be undertaken to protect them from unfair competition and trade practices. Those measures need to be consistent with obligations to the WTO. But basic customs duty cannot continue infinitely. But we need to protect the Indian industry.

Mr Ghosh, solar also faces the problem of quick change in technology. What kind of investments are we looking at into the R&D sector?

Sujoy Ghosh: In the manufacturing of solar photovoltaics, companies who are completely integrated across the value chain— they do everything, from semiconductors to the finished modules — have a natural advantage over companies only doing backend or part of the overall value chain. Unfortunately, most of the industry in India is doing model assembly, which is 25-30% of the overall value chain. From R&D standpoint, there are two aspects: how do you commercialise new technology to a full-scale production, where you’re producing millions of panels? The other part is, how do you upgrade your production facilities to keep pace? All of this comes back to, what is your essential business model? Are we generating enough money to keep cycling back into investments into R&D?
Visibility on returns, R&D must for green pushMr Vutukuri, what would you say on that?

Saibaba Vutukuri: In terms of technology, it is incremental in nature; there’s no transformational technology which will put off the previous manufacturing base into zero. In terms of R&D investment, if the private sector has to put in money, they have to make money. We have already achieved tariffs of Rs. 2 to 2.40 per unit. Why are we auctioning and reverse bidding?

Mr Gupta, in terms of R&D, where do you see the domestic industry?

Ranjit Gupta: If we can get to the size and scale that we want, R&D will follow. Technology is available off the shelf, and it’s not as if the technology is available only to the Chinese. At this point, where the solar tariffs are, it is easier to pass on the incremental tariff due to local manufacturing to consumers.
Visibility on returns, R&D must for green push

Even if we get our suppliers localised, we still have to import a huge part of our raw materialPhani Gujjari, Head of Operations, LM Wind Power India (GE Group company)

Phani, you spoke about entire supply chains needing to move in. What is the way forward?

Phani Gujjari:

There should be enough money in the entire value chain. Second is supply chain. I’m in the blade business, so I can see that supply chain is critical. Manufacturing is a lot more manual in nature. India is most favoured for manufacturing of wind blades. From that point of view, my industry in particular, it is the supply chain. We want to make it domestic and diversify the tier 2 supply chain.

Do we need to relook at the auction mechanism?

Guruprasad Mohapatra: When I was in the state power department, solar was Rs 15 per unit and it has now come down to around Rs 2.60. The government can buy only through the bidding process. Since I am in the government, I cannot say that the government is using the wrong methodology. If you can bring down the cost of production, it’s an overall mandate of the government by reducing the cost of power, land, credit, making easy availability of finance, compliance burden reduction. We will continue with our efforts to protect and nurture the Indian industry, that is the major mandate.

Policy stability in states is a key issue. Can the centre do something about it?

Guruprasad Mohapatra: We are trying to enter into an MoU between the state and the central ministry and the government of India. To encourage investment in that state, the state must guarantee certain things. One is policy stability that if the state has announced a certain distribution system where they buy a certain percentage of renewables, then they must not change it for a certain number of years. We’ve drafted an MoU, sent it to states for consultation. Once it is done, we’ll sign such MoUs.These couple of unfortunate incidents that we referred to happened in one particular state. In a democracy when a regime changes, certain amount of this is expected.

Mr Gupta, what prompts the industry to bid aggressively? Is it a fault of the methodology?

Ranjit Gupta: I’m quite ambivalent. As far as the government is concerned, there is no other way than reverse bidding. We have to figure out as an industry why we bid so low. There’s no link between the low bid and how that impacts manufacturing. Even in the wind sector, if we had the option of buying turbines from outside of India, we would have done that and increased our profit margins. Instead of a Rs 2.20 tariff, if I’m given Rs 2.50 tariff today, I don’t think I’ll go out and buy Indian modules.

Mr Ghosh, do you agree that no matter what the tariffs are, it won’t really impact our imports?

Sujoy Ghosh: People are bidding aggressively because there is capital available, there is excess equity, and excess capacity in this industry. There is no direct correlation between tariffs and manufacturing. Unfortunately in India, the way the auctions happen, there is an element of speculation. At the end of the day, the manufacturing industry also has to be competitive. As a manufacturer, you cannot completely rely on barriers and promote inefficiency.

Does Indian industry have the appetite to take up this challenge thrown by the government?
Saibaba Vutukuri:
You need to have trust in the policy, that the tariff or non-tariff barriers are going to sustain for a long period. The subsidies are going to be available for 5 to 10 years, and the ecosystem is going to be built and available. You need to have all these things before anybody can come forward.

(Moderated by Deepshikha Sikarwar)

HPL Electric makes weak debut, shares fall nearly 6%

New Delhi: Shares of HPL Electric & Power made a lacklustre debut at bourses today, falling nearly 6 per cent over the issue price of Rs 202.

The stock listed at Rs 190.05, down 5.91 per cent from the issue price, on BSE. It later touched a day’s low of Rs 184.30, a slump of 9.6 per cent.

At NSE, it debuted at Rs 190, a loss of 5.94 per cent.

The company commands a market valuation of Rs 1,218.17 crore.

The company’s IPO was oversubscribed a little over eight times during September 22-26.

The quota reserved for qualified institutional buyers (QIBs) was oversubscribed 5.77 times while for non-institutional investors, it was 22.20 times. The retail investor portion attracted 3.31 times subscription.

The price band for the IPO was fixed at Rs 175-202 per share.

Proceeds of the issue will be utilised for repayment of loans, funding working capital requirements and other general corporate purposes.

HPL Electric makes metering solutions, switch gears, lighting equipment and wires and cables, among others.

China's Great Wall plans new electric, smart vehicle brand: Sources

BEIJING/SHANGHAI, – China’s Great Wall Motor plans to launch a new standalone brand for electric and smart vehicles, sources familiar with the plan said, as automakers in world’s biggest car market pursue growth in the new segment.

Inspired by the market success of electric vehicle leader Tesla Inc, as well as Chinese startups Nio Inc, Li Auto and Xpeng Inc, several Chinese automakers this year announced plans for new electric brands, mostly to offer more expensive products than their mass-market lines.

Conventional Chinese automakers such as SAIC Motor , Changan Automobile and GAC are seeking to move their products up the value chain as China’s economic planners push new technologies.

Baoding-based Great Wall will launch a new standalone brand, internally coded as “SL project”, for electric and smart vehicles, which will be priced higher than existing products, two people, who declined to be named, said.

The new brand, the name of which sources declined to reveal, will include sport utility vehicles (SUV) and sedans, which will be battery electric vehicles or extended range electric vehicles that allow drivers to charge their cars with electricity or gasoline.

Asked about the plan, a Great Wall spokesman said “the big tide has come, we will join the game,” without elaborating.

Great Wall currently has the affordable electric Ora brand and is building an EV factory with BMW in China.

To compete with rival Geely, Great Wall has added the P-series pickup truck and off-road SUV models to its range. In the first 11 months, it sold almost a million vehicles.

The new brand is Great Wall’s second attempt to crack the premium segment. In 2016, it launched its WEY brand for more upscale models, although it has struggled to generate sales growth.

Petrol price at 2-year high of Rs 83 per litre, diesel at 73.32 in Delhi

NEW DELHI: Petrol price on Saturday breached the Rs 83 per litre-mark in Delhi for the first time in more than two years after a rally in international oil prices forced a 13th increase in rates in the last fortnight. Petrol price on Saturday was raised by 27 paise per litre and diesel by 25 paise, according to a price notification of oil marketing companies.

Petrol price in Delhi rose to Rs 83.13 per litre from Rs 82.86. Diesel rates went up from Rs 73.07 to Rs 73.32 per litre.

This is the highest rate for petrol and diesel since September 2018 and followed the 13th increase in rates since November 20 when oil companies resumed daily price revision after nearly a two-month hiatus.

In 16 days, the petrol price has gone up by Rs 2.07 per litre and diesel rate has risen by Rs 2.86.

ICICI Securities said vaccine hopes are driving oil prices up.

Brent crude oil is up 34 per cent from lows in end-October 2020 driven by hope that COVID-19 vaccines would lead to demand recovery.

“The oil price surge is despite a second wave of Covid in Europe and US (which has led to demand recovery reversal), and surge in Libyan oil output from 0.1 million barrels per day (bpd) to 1.25 million bpd,” it said.

Oil cartel OPEC plus its allies like Russia, (called OPEC+), deciding to raise output from January 2021 more modestly than earlier agreed is likely to ensure global supply deficit even in the first quarter of 2021. “Thus, OPEC+ has done its part to prevent supply surplus until the vaccine boosts demand,” it added.

Brent has risen from USD 36.9 per barrel on October 30 to USD 49.5 on December 4.

IEA estimates the global oil supply deficit at 2.1-2.8 million bpd in Q3-Q4 calendar year 2020. However, a surplus of 0.4 million was likely in Q1 2021 if OPEC+, as agreed in April 2020, was to prune output cuts from 7.7 million bpd to 5.8 million bpd from January.

“However, we now estimate supply deficit of 0.5 million bpd in Q1 2021 and 0.2-2.8 million bpd in Q2-Q4 as OPEC+ has decided to raise output by just 0.5 million bpd in January 2021 and by not more than 0.5 million bpd in later months and only after deliberations,” ICICI Securities said.

Prior to the November 20 hike in rates in India, petrol prices had been static since September 22 and diesel rates hadn’t changed since October 2.

Public sector oil marketing companies – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – revise rates of petrol and diesel daily based on benchmark international oil price and foreign exchange rate.

They had, however, resorted to calibrating the rates since the pandemic broke out with a view to avoiding volatility in retail prices.

The 58-day hiatus in petrol price revision and 48-day status quo on diesel rates were preceded by no change in rates between June 30 and August 15 and an 85-day status quo between March 17 and June 6.

In Mumbai, the petrol price on Friday was raised to Rs 89.78 per litre from Rs 89.52, while diesel rates went up from Rs 79.66 to Rs 79.93.

Rates vary from state to state depending on the incidence of local sales tax or VAT.

Govt invites bids for setting up solar power systems in homes

Panaji: In the midst of stiff opposition against that Goa Tamnar Transmission Project Ltd (GTTPL) project, and a debate on why solar power is not being generated in the state, the Goa Energy Development Agency (GEDA) has invited bidders to design, manufacture, supply, install, test and commission solar PV systems at various households in Goa.

The last date of issuance of the tender document is December 11 and the tender will be opened on December 19.

Earlier this year, in June, the state cabinet decided to implement the rural village electrification scheme for households to help 90 houses in Sanguem, Quepem, Sattari and Canacona get electricity through renewable energy.

The scheme aims at bringing electricity, through renewable sources, to un-electrified remote villages, hamlets and wards where grid connectivity is either not feasible or not cost-effective.

“Keeping in view the role of electricity in human and socio-economic development, this scheme is formulated to ensure last mile connectivity and electricity connections to all remaining un-electrified households in the state. This scheme is therefore formulated in order to fulfill the government’s target of 100 percent electrification in the state,” a senior officer said.

Under the scheme, 100% financial assistance will be provided to households, with an upper limit of Rs 90,000 per household, for a 500 Wp solar system. This amount will include cost of transportation and installation as well as annual maintenance contract (AMC) for five years.

Adani Transmission completes acquisition of Alipurduar Transmission from KPTL for Rs 1,300 cr

New Delhi: India’s largest private sector power transmission company, Adani Transmission Ltd (ATL), has acquired 49 per cent stake in Alipurduar Transmission Limited from Kalpataru Power Transmission Ltd (KPTL) with an agreement to acquire the balance 51 per cent after obtaining regulatory and other approvals.

The company said in a statement the acquisition is in sync with ATL’s strategy to enhance the value for its stakeholders, through organic as well as inorganic opportunities. The share acquisition is pursuant to definitive agreements signed in July 2020.

“With this acquisition, the cumulative network of ATL will reach more than 15,400 circuit kilometers (ckt), out of which more than 12,200 ckt kms (including this asset) is operational and more than 3,200 ckt kms is under various stages of execution,” the statement said.

Adani Transmission is the transmission and distribution business arm of the Adani Group. ATL is the country’s largest private power transmission company with a network of more than 15,400 circuit kilometers.

India sees consecutive year-on-year decline in coal funding: Report

New Delhi: The third annual Coal vs Renewable Financial Analysis 2019 marks a second consecutive year-on-year decline in coal funding in India following a 90 per cent decrease in 2018.

The report, made public on Tuesday, finds a 126 per cent drop in funding from the commercial banks to coal compared to 2018.

There has also been a significant drop in the state-owned financing of coal projects. Lending to renewable energy projects saw a minor contraction of six per cent year on year although it received 95 per cent of the total lending to energy projects.

The report, prepared by the Centre for Financial Accountability (CFA) and Climate Trends, looked at 50 project finance loans across 43 coal-fired and renewable energy projects in India. Only projects that reached financial close between January 1, 2019, and December 31, 2019, were included in the analysis.

“A significant drop in project finance to coal means that financial institutes are beginning to realise the associated financial and reputational risk in investing in coal,” said CFA Executive Director Joe Athialy.

“Our policy makers need to read the writing on the wall. Pushing healthy commercial banks into financing unviable coal projects in India and abroad will only lead to more stress in the financial sector,” Athialy added.

2019 saw two coal projects (total capacity of 3.06GW) receiving Rs 1,100 crore ($190mn) in project finance. In 2018, five coal-fired projects with a combined capacity of 3.8GW received Rs 6,081 crore ($850mn).

By contrast, Rs 60,767 crore ($9.35bn) was lent to 17GW of coal projects in 2017.

Of the total lending to coal in 2019, Rs 700 crore went towards refinancing of JSW Energy‘s Barmer power plant in Rajasthan. This project was also refinanced in 2018.

Refinancing of projects almost always happens to change term conditions such as interest rates or maturity date. JSW Energy is among the progressive private power generation companies that announced a moratorium on construction of new coal power plants and focussed on expanding their renewable energy portfolio.

The remaining Rs 400 crore ($91mn) went towards financing NTPC’s new coal project in Barh in Bihar. The project’s engineering, procurement and construction responsibilities have been awarded to Doosan Heavy Industries.

NTPC, India’s largest coal power operator, recently announced a moratorium on construction of new greenfield coal power plants.

“In addition to private and publicly owned coal power companies, heavily industrialised states like Gujarat and Maharashtra have also announced a no new coal policy. These policies are being announced due to the coal overcapacity problem as well as plummeting cost of renewables. And it is clearly in the interest of India’s economic stability and developmental needs,” added Delhi-based Climate Trends Director Aarti Khosla.

Forty-one renewable energy projects with a total capacity of 5.15GW received a cumulative of Rs 22,971 crore ($3220mn). Lending to wind energy dropped 30 per cent, while lending to solar increased by 10 per cent compared to 2018.

Solar dominated project finance loans to renewable energy in 2017, 2018, and 2019. However, due to the financial stress in India’s power distribution companies, investment in the renewable energy sector has been impacted. They owe generation companies Rs 1,16,340 crore ($16bn) of which $1.1bn is owed to the renewable energy generators.

“While India is on track to achieve its Paris climate commitments, its ambitious domestic target of 450GW by 2030 might suffer if the financial condition of its discoms doesn’t improve. Phasing out old, inefficient, and expensive coal power plants and replacing them with renewable energy might be a way to reduce the financial stress within the sector,” Khosla added.

China lifts renewable power subsidy for 2021 by nearly 5% y/y

China’s Ministry of Finance said on Friday it had set the country‘s renewable power subsidy for 2021 at 5.95 billion yuan ($905.7 million), up 4.9 per cent from this year, thanks to a big increase in the subsidy for solar projects.

The subsidy will be allocated to wind farms, biomass power generators and distributed solar power operators, as well as solar power projects for poverty alleviation purposes, in 14 regions, according to a statement from the ministry’s Central Budget and Final Accounts Public Platform.

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