Facility with IDFC Provides Much-needed Long-term Credit, Supports U.S.-India Partnership
WASHINGTON--The Board of Directors of the Overseas Private Investment Corporation (OPIC), the U.S. Government's development finance institution, today approved $250 million in financing to help India's premier infrastructure lender expand its lending to renewable energy and infrastructure projects, providing much-needed long-term capital to the country's effort to keep pace with the sectors' massive potential.
India's Infrastructure Development Finance Company (IDFC) will use the OPIC guaranty to expand its lending to solar photovoltaic projects, energy efficiency projects, projects that reduce energy consumption and/or demand, and wind farm projects, among others. The OPIC financing will also support IDFC's"Go Green" initiative, which aims to mitigate the social, environmental and carbon footprint of its projects, as well as lending to infrastructure projects.
Despite significant growth over the past few years, India's renewable energy sector remains underserved, primarily due to the inability of financial institutions to offer long-term lending. The lack of long-term funding options, especially given current financial market conditions, has made bi- and multi-lateral support much more critical.
"India's renewable energy industry has grown by leaps and bounds these past few years, but in order for it to reach the next level and achieve the scale and sustainability we all wish to see, it must get long-term financing," said OPIC President and CEO Elizabeth Littlefield. "In a current environment of limited liquidity, this OPIC facility will provide IDFC with precisely the long-term funding it needs to serve India's vast capital needs for the renewable energy and infrastructure sectors. We are delighted by this opportunity to team up with India's most influential infrastructure lender."
Dr. Rajiv Lall, Managing Director and CEO of IDFC, said, "Only about a sixth of India's renewable energy resources have been tapped so far, leaving huge potential for future market growth. The OPIC facility will provide valuable support for India's renewable energy strategy which aims not only to lower the carbon intensity of the country's growth, but also to address the need for energy security."
Among its many benefits, the project also supports the Indian Government's goal of expanding renewable power generation, as well as the U.S.-India Partnership to Advance Clean Energy (PACE), designed to improve energy access and promote low-carbon growth through the research and deployment of clean energy technologies.
IDFC was established in 1997 as a non-banking finance company by a consortium of public and private investors to encourage private sector participation in the Indian infrastructure sector. Nearly one quarter of its shares are held by U.S. investors, including large mutual funds managed by Fidelity, Morgan Stanley and Vanguard.
OPIC is the U.S. Government's development finance institution. It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. To date, OPIC has supported more than $200 billion of investment in over 4,000 projects, generated an estimated $75 billion in U.S. exports and supported more than 276,000 American jobs.