IREDA Loan Scheme for “Compressed Bio- Gas (CBG)” under SATAT Scheme
Dear-Businessman/Investors,
In Series of KIP:Business and Subsidy Update, today we are going to share with you benefit of IREDA Loan Scheme for “Compressed Bio- Gas (CBG)” under SATAT Scheme.
Biogas is produced from waste / bio-mass sources (e.g., agricultural residue, cattle dung, sugarcane press mud, municipal solid waste, and sewage treatment plant waste) through the process of anaerobic decomposition. Compressed Biogas (CBG) has calorific value and other properties similar to Compressed Natural Gas (CNG) and hence can be utilized as green renewable automotive fuel. Thus, it can replace CNG in automotive, industrial, and commercial areas, given the abundance biomass availability within the country.
SATAT’ (Sustainable Alternative Towards Affordable Transportation) Scheme on Compressed Biogas (CBG) was launched on 1st Oct 2018 by Ministry of Petroleum and Natural Gas, Government of India. The objectives of the scheme are: • Utilizing more than 62 MMT of waste generated every year in India, • Cutting down import dependence, • Supplementing job creation in the country, and • Reducing vehicular emissions and pollution from burning of agricultural / organic waste.
Business Model:
The business model has been framed by the Oil Marketing Companies and indicated in the Letter of Intents (LoI) issued to the entrepreneurs. CBG plants are proposed to be set up mainly through independent entrepreneurs who will be responsible for planning and execution of the projects (including sourcing of raw materials, operation, and maintenance of plants) as well as maintaining final product output quantity and quality.
Loan Scheme: “Compressed Biogas (CBG) under SATAT”.
1 | Sector | Waste to Energy/Bioenergy |
2 | Sub Sector | CBG under SATAT |
3 | Eligibility | 1.Entrepreneurs having: • Contract Agreement for sale of CBG with OMCs with 100% off take guarantee. The tenure of agreement should be more than the loan duration. • Legally binding contract for purchase of raw materials. The tenure of agreement should be more than the loan duration. 2. All other terms & conditions as per prevailing IREDA Norms/guidelines |
4 | Minimum Loan amount | As per IREDA Norms |
5 | Loan tenure | Upto 10 years excluding moratorium and construction period or 80% of the life of contract agreement for sale of CBG, whichever is less |
6 | Moratorium | Upto 1 Year |
7 | Construction Period | Upto 1.5 Year |
8 | Debt Equity ratio | 70:30 |
9 | IREDA Loan amount limit | Maximum up to 70% of the project cost |
10 | Interest rate | As per IREDA Policy |
11 | Upfront Equity | At least 50% of the Promoters contribution should be brought in upfront in form of pure equity. |
12 | Primary Security | One or more additional securities, from the following: • Mortgage of urban residential/ commercial land based on project strength • Pledge of share – minimum 51% • Personal Guarantee • Corporate Guarantee • Bank Guarantee/ FDR for an amount not less than 10% of IREDA loan amount • Any other security, to the satisfaction of IREDA |
13 | Collateral security | One or more additional securities, from the following: • Mortgage of urban residential/ commercial land based on project strength • Pledge of share – minimum 51% • Personal Guarantee • Corporate Guarantee • Bank Guarantee/ FDR for an amount not less than 10% of IREDA loan amount • Any other security, to the satisfaction of IREDA |
14 | General Conditions | • Execution of project should be preferably through an experienced Contractor • Lender’s Independent Engineer (LIE) to be appointed for close monitoring • The applicant will provide all statements, information, materials, and explanations relating to its business and financial position including Annual Audited Financial Statements and Directors’/Auditors’ Reports etc. • The applicant shall obtain all the statutory clearances/approvals, as may be required for implementation/operation • The Company shall submit production and sales details on monthly basis |
General Conditions:
- The borrower shall provide all information and documents reasonably required in connection with the procurement, of any goods, services and works to be financed by IREDA, as per the established commercial practices.
- IREDA may share the charge of assets as per extant policy.
- The subsidy/grant, if any given by the Central Government/ State Governments shall be adjusted against loan sanctioned by IREDA.
- The interest subvention/interest subsidy, if any given by State/Central Govt., will be passed on to the project.
- Revenue from the products such as Manure etc. may also be considered as part of the cash flow calculations during the appraisals. However, annual and average DSCR of at-least 1.0 and 1.10 respectively, be maintained for loan tenure without considering revenue from unconstructed by-products.
- Other terms and conditions shall be as per prevailing Financing Norms/ Guidelines of IREDA.
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