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Japan : Signing of Japanese ODA Loan Agreements with the Government of India

September 2, 2014

On September 1, the Japan International Cooperation Agency (JICA) signed Japanese ODA loan agreements with Indian Renewable Energy Development Agency Limited and Small Industries Development Bank of India, respectively, to provide up to 60 billion yen.

Along with rapid economic growth, energy consumption is increasing rapidly in India. With demand growing at an annual rate exceeding 7 percent since 2001, the power supply cannot keep pace, leading to a chronic power insufficiency of about 10 percent that entails frequent urban power outages. Compensating for this shortage, fossil fuel imports have greatly increased in recent years which have been a serious concern for India in terms of financial strain and energy security. To increase the supply of domestically produced power and reduce the dependency on fossil fuel imports, the Government of India is promoting the use of new and renewable energy and taking measures to make energy use more efficient by enacting the Energy Conservation Act and the Integrated Energy Policy.

Through the India-Japan Energy Forum and the Japan-India Energy Dialogue, the Government of Japan announced that it would continue to proactively support India s environmental and energy policies. In addition, at the Japan-India Summit Meeting held in New Delhi in January 2014, Japan and India agreed to continue working together to further strengthen cooperation in the energy sector, and these loan agreements build on that understanding. The signed Japanese ODA loans have the following characteristics:

(1) Promoting Renewable Energy Development Compensating for power shortage, fossil fuel imports have greatly increased in recent years. Through New and Renewable Energy Development Project (Phase 2), mid- to long-term funding required for renewable energy projects will be provided to electricity producers through the Indian Renewable Energy Development Agency (IREDA). The Government of India has been working to spread the use of solar energy production, which is an important focus of this project. Through this project, stable and diversified sources of power supply will be promoted to meet demand, which is expected to support sustainable economic development in India and mitigate climate change.

(2) Supporting Energy Savings at Micro, Small and Medium Enterprises With increases in energy consumption driven by rapid economic growth, India is now the third largest energy consuming country in the world. However, India s energy consumption per GDP is more than five times higher than that of Japan, and therefore improving energy efficiency is a significant challenge for the country. Through Small Industries Development Bank of India (SIDBI) and other financial intermediaries, Micro, Small and Medium Enterprises Energy Saving Project (Phase 3) primarily provides medium- to long-term financing to Micro.

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Source: TendersInfo (India)

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