REC Ltd Plans to Finance Nuclear Power and Green Energy Projects Worth ₹1 Trillion Annually

REC Ltd, a state-run power lender in India, is eager to finance nuclear power projects as it aims to invest ₹1 trillion each year in green energy through the end of the decade. In an interview, the company’s chairman and managing director, Vivek Kumar Dewangan, stated that REC is committed to spending a total of ₹6 trillion on energy transition projects by 2030. The company will also consider financing cross-border transmission projects, particularly as the planned India-Sri Lanka transmission line and other regional interconnections begin to take shape.

Dewangan mentioned that while REC is open to financing nuclear power, no one has approached them for funding such projects yet. “We are willing to finance nuclear, but no one has come to seek financing for nuclear projects so far,” he said. REC has had preliminary discussions with the Nuclear Power Corporation of India Ltd (NPCIL) regarding future projects, but they are still awaiting a formal request for financing.

The government’s plan to boost India’s nuclear power generation capacity from the current 8 GW to 22.4 GW aligns with REC’s interest. Nuclear power is seen as a valuable non-fossil fuel source due to its low carbon emissions.

At the recent ‘RE-INVEST 2024’ conclave, REC committed the most financing among public sector banks and non-banking financial companies (NBFCs) to support India’s green transition by 2030, signing loan agreements worth ₹1.12 trillion.

Dewangan explained that the goal is to expand the company’s renewable energy loan portfolio to ₹3 trillion by 2030, which would make up 30% of its total loan book. Last year, REC sanctioned projects worth ₹1.36 trillion in renewable energy and expects to approve at least ₹1 trillion each year for the next six years to meet its ₹6 trillion target.

Although REC has diversified into non-power infrastructure, funding for those projects has declined as the focus shifts back to coal-based power and green energy. Dewangan noted that financing cross-border transmission projects is still a priority, with the India-Sri Lanka transmission line project still pending finalization. He emphasized that the focus would initially be on neighboring countries in Southeast Asia.

Regarding borrowing plans, Dewangan stated that REC is on track to raise $20 billion (about ₹1.6 trillion) during this fiscal year, with ₹84,000 crore already disbursed in FY25. The company utilizes various fundraising methods, including lower-rate external commercial borrowings and 54EC capital gain bonds, which are tax-exempt for investors.

Dewangan explained their borrowing strategy, mentioning that about 40% of their funding comes from domestic corporate bonds, while 18% comes from domestic term loans. The 54EC bonds account for about 10% of their funding and are an attractive option due to tax benefits.

“We follow a very judicious mix of borrowing,” Dewangan said, adding that they also raise funds through external commercial borrowings in foreign currency. He pointed out that foreign currency borrowing, after hedging, has become a cheaper option, allowing them to reduce borrowing costs to below 7%. The company recently raised $500 million through green dollar bonds to support various renewable energy projects.