Tata Power Eyes domestic loan of up to USD 1 billion for renewable energy projects

Tata Power is reportedly planning to raise up to $1 billion to finance its clean energy projects. This could potentially be the largest domestic currency loan in India this year.

According to a Bloomberg report, the Tata Group subsidiary is in loan talks with several lenders including State Bank of India, IndusInd Bank, Axis Bank and ICICI Bank.

Sources cited in the report revealed that the largest domestic currency loan in India this year was a $365 million deal by Assam Bio-Refinery Pvt. in February. If Tata Power’s proposed loan reaches anywhere near $1 billion, it would surpass that record.

The loan proceeds will be used for Tata Power’s $1.6 billion investment plan announced in August last year. The plan aims to develop some clean energy projects called pumped storage.

India plans to almost triple its renewable energy capacity by the end of the decade. Companies like Tata Power, Adani Green Energy Ltd. and Reliance Industries Ltd. are increasingly focusing on this direction. Tata Power, for example, aims to almost quadruple its renewable energy generation capacity by 2027.

The loan agreement may take the form of a bilateral loan or a club facility. Tata Power expects to finalize loan agreements with lenders in the next three to six months, after which disbursements will be made in phases depending on the progress of the project.

The loan interest rate can be determined based on local benchmarks such as the Reserve Bank of India’s repo rate or treasury bills, the report said. However, as discussions are still ongoing, the agreements may be modified.

On an annual basis, the company’s shares on the National Stock Exchange brought a multibagger return of almost 116%.