Tata Power Co., a major player in the Indian power generation sector, is in discussions with several Indian lenders to secure a loan of up to $1 billion for its clean energy projects.
This financing effort could potentially become the largest local currency loan in India this year. The Tata Group subsidiary is engaging with prominent banks, including the State Bank of India, IndusInd Bank, Axis Bank, and ICICI Bank, according to sources familiar with the matter.
This prospective loan surpasses the current largest local currency loan of 2024, a $365 million deal secured by Assam Bio Refinery Pvt. in February. Should Tata Power’s negotiations conclude successfully, the resultant loan could redefine the scale of domestic financing in the renewable energy sector. The funds from this loan are earmarked for Tata Power’s $1.6 billion investment in clean energy projects, specifically in pumped hydro storage. This investment, initially announced in August, aligns with India’s broader strategy to nearly triple its green power capacity by the end of the decade. Key players in this sector, including Tata Power, Adani Green Energy Ltd., and Reliance Industries Ltd., are aggressively expanding their renewable energy portfolios.
Tata Power has set an ambitious goal to quadruple its renewable energy generation capacity by 2027. This expansion underscores the company’s commitment to supporting India’s transition to sustainable energy sources. The forthcoming loan could be structured either as a bilateral arrangement or a clubbed facility. Tata Power anticipates finalising the credit arrangements within the next three to six months, with funds to be disbursed in tranches contingent on project milestones.
The pricing of the loan is expected to be linked to local benchmarks such as the Reserve Bank of India’s repo rate or treasury bills. As negotiations progress, the specifics of the deal may evolve, reflecting the dynamic nature of financial arrangements in the energy sector. India’s renewable energy landscape is poised for significant growth, driven by substantial investments and policy support. Tata Power’s planned borrowing not only highlights its strategic priorities but also signals confidence in the long-term viability of renewable energy investments.
