Among the several agreements inked by India and the European Union at the joint summit held on Friday, the European Investment Bank (EIB), which is a multi-lateral lender representing the 28 member nations of the EU, signed pacts to finance Bangalore Metro project and renewable energy projects in India. In an interview with Pranav Mukul, EIB’s vice-president Andrew McDowell highlighted the other projects here that the bank is looking to finance, and how India could learn from global experiences in achieving its ambitious renewable energy targets. Excerpts:
What is the extent of cooperation between India and EU from the perspective of the EIB?
Our visit is in the context of the EU-India summit. We participated to demonstrate the support of the European Investment Bank for deepening the EU-India cooperation particularly in the areas of climate change and climate action, and finding and hoping to finance infrastructure projects in India consistent with the Indian government’s ambition to make India a leader in renewable energy, and consistent with the ambition to urbanise in a way that is environmentally and socially sustainable. We announced at the summit that we are doing more financing in India than ever before – around 1.4 billion euros worth of project approvals and signatures – including a 500-million-euro financing for the Bangalore Metro project for its second stage project. This is exactly the type of project that we believe will help transform India in a sustainable way, and will reduce the huge pressure in Bangalore in commuting times. It will reduce commuting time in some parts of Bangalore from 2 hours to 15 minutes. It will help women to access the labour force and to be able to travel to work in a safe and sustainable way, and it will reduce the carbon emissions.
Are there other transport projects in India that EIB is planning to finance?
In fact this is the second metro project that we signed this year. We did Lucknow metro project, which just opened. Further, we have got a pipeline of more projects including Pune and other metro projects that we are now in the process of appraising.
What is your plan for financing renewables in India?
We have indicated our intention to do more renewable energy in India, primarily to our relationship with the State Bank of India, India Infrastructure Finance Company Ltd, and Indian Renewable Energy Development Agency, who are our local partners for transmission of EIB financing to solar and wind projects. All together we have done projects in recent times that have added 1.4 GW of zero-carbon energy sources to the grid here in India in the recent years. So we are making a contribution to India’s very ambitious renewable energy targets and in particular the national solar mission target of adding 100 GW of solar to the system by 2020.
Going ahead, how much do you plan to invest here?
Including the urban transportation and solar projects, we have got about 2 billion euros worth of projects in the pipeline for India that are currently being appraised.
Any timeline for the €2-billion investment?
Not particularly because it depends on how the appraisals get done. Sometimes they happen very quickly, and sometimes they take some time.
For renewables, India faces certain challenges including demand not picking up as expected, and issues around grid management. What makes EIB place its bets on the sector here?
We are conscious about the challenges, but sometimes it’s not just about the power generation, it’s also about the distribution systems and other challenges that India faces. We have no doubt about the pace of electrification that is going to be required it India, and the ambition that all Indian citizens have access to power. But if it is not done through renewables, it will have global consequences. That is why we want to support the objectives of the Indian government in dramatically increasing the share of renewables in the overall power generation, even as the country electrifies. We believe that power consumption is going to increase significantly. The EIB is the world’s largest lender for renewable energy projects, and last year we loaned about 20 billion euros for climate change and about 4-4.5 billion euros for renewable energy alone. The challenges faced in the different corners of India, are exactly the same technical challenges that were faced across Europe, and also for projects we have done in Africa and Latin America.
So are you saying that the challenges are more technical than financial?
It is as much technical as financial. It is often a key factor for first time projects to proceed, and also succeed in the long-term. In Europe, many commercial banks were very wary about supporting a sector they did not understand. By working with small scale projects, it helped them build up technical teams within banks. In the next coming weeks, we expect to confirm our first ever engagement with a private bank in India – Yes Bank, which will help them understand more. We already have a partnership with the state counterparts, but want to be able to broaden that.
Does EIB worry about the deadlock in India-EU free trade agreement talks?
More trade and investments between India and EU will obviously be good, but we can continue our business one way or the other. But certainly as an EU institution we would welcome expansion of trade and investment with India, and that could generate more business for us, including financing foreign direct investment by European companies in India.