REC Signs $215 Million Loan Agreement with KfW to Reform Indian DISCOMs

This is the sixth line of credit under the Indo-German Development Cooperation

December 11, 2023


Public infrastructure finance company REC Limited has signed a €200 million (~$215 million) loan agreement with German bank KfW. The loan will be used to undertake reforms in India’s distribution sector.

Under the Indo-German Development Cooperation, this marks REC’s sixth line of credit.

“This announcement not only showcases REC’s ability to secure strategic partnerships with international financial institutions but also underscores our integral role in driving positive change within the power distribution landscape in India. The collaboration with KfW is expected to have a transformative impact on the operational capabilities and financial resilience of DISCOMs, ultimately contributing to the broader goals of the RDSS scheme and the nation’s power sector reforms,” said T.S.C. Bosh, Executive Director, REC.

REC is the nodal agency to implement the Revamped Distribution Sector (RDSS) program, a government initiative to help distribution companies improve their operational efficiencies and financial sustainability by providing them with result-linked financial assistance. The program is designed to strengthen supply infrastructure based on meeting pre-qualifying criteria and achieving basis minimum benchmarks.

REC has set a target of achieving a green finance portfolio totaling ₹3 trillion (~$36 billion) by FY 2023. In addition to backing conventional renewable projects, the company has also financed technologies such as hybrid power, pumped storage, electric vehicles, solar modules, and wind turbine manufacturing.

In September 2023, the company approved funding of ₹60.75 billion (~$730.8 million) to Greenko to develop a 1,440 MW standalone pumped storage project.

Earlier that month, REC raised $1.25 billion aimed at financing power, infrastructure, and logistics sector projects.

VK Singh, REC’s Director (Projects), mentioned that the company’s loan book in the renewable energy space has grown to ₹298.33 billion (~$3.58 billion), or  6% of its loan book of ₹4.74 trillion (~$56.88 billion) in FY 2022-23. This figure is expected to increase exponentially owing to approvals of ₹499.29 billion (~$5.99 billion) in the first half of FY 2023-24.