SECI Seeks Short-Term Working Capital Credit Facility of ₹6 Billion

The last date to submit the proposal is September 5, 2023


Solar Energy Corporation of India (SECI) has invited quotations for a short-term working capital credit facility of up to ₹6 billion (~$72.3 million) to help it make monthly payments to solar, wind, and hybrid energy projects.

The credit facility can be a cash credit, overdraft, or working capital demand loan.

The last date to submit proposals is September 5, 2023.

The non-fund-based credit facility will be for one year, with an option to renew it for a year more. Facility tie-up may be done with multiple banks; however, the total facility will only be up to ₹6 billion (~$72.3 million).

As of June 30, 2023, SECI has successfully commissioned projects with a combined capacity of over 16 GW, overseeing power trading in this capacity. The developers receive an average monthly payment of around ₹10.45 billion (~$125.9 million), which is expected to rise due to upcoming project completions.

As per the provisions of the power purchase agreements signed under various programs, SECI is obligated to make payments to the developers without any surcharge within 30 days from the due date, which is 30 to 45 days from the receipt of the invoice. Therefore, the payment is effectively released to the developers within 60 to 75 days from the invoice issue date.

However, as per the provisions of the power sale agreement, DISCOMs are required to pay SECI without a levy of surcharge within 30 days from the due date, which is 30 days from the date of submission of invoices. Thus, DISCOMs can release payment up to 60 days after invoice submission.

To comply with the terms of the power sales agreement and the guidelines set by the Central Electricity Regulatory Commission to obtain a trading margin of ₹0.07 (~$0.00084)/ kWh of sale, it is necessary to establish and provide letters of credit in favor of renewable energy power developers.

SECI has been rated an ‘AAA’ Outlook (stable) by the Investment Information and Credit Rating Agency during 2022-23 for its ₹15 billion (~$180.7 million) line of credit.

Additionally, as per the Trading Regulation of 2020, trading licensees must create letters of credit for power suppliers that are 1.1 times the average monthly bill amount (calculated based on three months’ estimates or the actual bills of the preceding three months). These letters of credit have a one-year validity for long-term contracts. To adhere to these regulations, SECI has issued letters of credit totaling ₹10.77 billion (~$129.7 million) in favor of developers.

SECI has been awarded a capacity of 1,200 MW under the Central Public Sector Undertaking Program by IREDA. As per the terms of a letter of award, SECI must provide a performance bank guarantee of ~$2.68 billion (~$32.3 million), which is 50% of the total viability gap funding (VGF) sanctioned. SECI may be required to submit a performance bank guarantee in favor of IREDA when requesting the first tranche of VGF after signing the engineering, procurement, and construction agreement.

SECI disbursed ₹10.5 billion (~$127.3 million) to wind and solar power generators for the electricity procured in May 2023.

In March last year, SECI requested quotations for a short-term working capital credit facility of up to ₹5 billion (~$60.2 million).