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AIIB to provide $100 million to L&T Infra for clean energy play

Luxembourg: The Asian Infrastructure and Investment Bank (AIIB) will provide $100 million to Larsen & Toubro Infrastructure Finance Ltd, betting big on clean energy development in India, a senior AIIB official told ET.

“We would be lending $100 million to begin with,” AIIB vice-president and chief investment officer DJ Pandian said. The AIIB board, which met in Luxembourg, has approved the proposal. The financing marks AIIB’s first loan to a non-banking finance company.

Pandian said some other nonbanking finance companies had also approached the AIIB and their proposals were being examined. “We are doing our due diligence of their capacity, their viability, their past performance and regulatory conditions. Based on that we may select,” he said.

The proposed facility will be used by L&T Infrastructure Finance (LTIF) to finance mid- and large-scale solar and wind power projects in India. The proposed financing supports AIIB’s Sustainable Energy for Asia Strategy and Strategy on Mobilising Private Capital for Infrastructure.

The proposal is also aligned with the government of India’s plans to reduce India’s carbon intensity by 30-35% of 2005 levels under the Paris Agreement, according to the AIIB project document of L&T. The main idea behind the funding is to increase the supply of renewable energy in India through the mobilisation of private capital.

India Biggest Beneficiary

India is the second-largest shareholder of Beijing-based AIIB with a 7.5 % stake after China, which holds 20.06% of the bank. The AIIB, which is three years old, has provided up to $2 billion to New Delhi so far.

Pandian said more is in the pipeline. “India is the largest beneficiary of AIIB so far,” he said, adding that it could get at least $1 billion in this financial year. “We will be able to approve minimum $1 billion,” he said. AIIB has financed nine projects so far and there are many projects that are pending for approval.

These include metro projects in Mumbai, Chennai and Pune besides a power transmission and distribution project in Assam. Programmes being supported include an irrigation project in West Bengal and Andhra Pradesh urban development.

Source: Economic Times