Sumitomo Mitsui Banking Corporation (SMBC) and Power Grid Corporation of India (POWERGRID) have signed a green loan contract. The loan has a $200 million value and a $150 million greenshoe option, denominated in Japanese yen. This partnership will develop infrastructure to evacuate and integrate renewable energy sources into the national grid.
Strategic Collaboration
The green loan agreement will be a strategic partnership between POWERGRID and SMBC. The funds to be mobilized will ensure constant grid reliability and promote renewable energy projects pan-India. This supports India’s drive to transition from non-renewable to renewable energy sources.
Officials signed the agreement at GIFT City in Gandhinagar, Gujarat, on December 31, 2024. Senior officials from SMBC and POWERGRID attended the signing event. Among them were important SMBC representatives and G. Ravisankar, Director (Finance) and L.K. Khajkumar, ED (Corporate Planning) from POWERGRID.
Also read: ADB and India Collaborate to Boost Climate-friendly Infrastructure with $500 Million Loan
POWERGRID Completes Shareholding Transfer to PGInvIT
In a separate move, POWERGRID transferred 26% of its residual equity shareholding in four associate companies to POWERGRID Infrastructure Investment Trust (PGInvIT).
The companies involved include POWERGRID Kala Amb Transmission Ltd., POWERGRID Parli Transmission Ltd., POWERGRID Warora Transmission Ltd., and POWERGRID Jabalpur Transmission Ltd. The total consideration for this transfer is approximately INR 506.62 crore.
A regulatory filing states that POWERGRID no longer owns any stock in these businesses, and these businesses no longer consider POWERGRID as a partner. As part of its continuous efforts to streamline its asset management and concentrate on its core business, POWERGRID is making this move.
Supporting India’s Renewable Energy Transformation
The money raised through the green loan will be critical to the renewable energy transformation of India. As India increases its renewable energy capacity, evacuation and integration into the grid requires stronger infrastructure. POWERGRID is best positioned to meet this challenge because it established deep roots in power transmission
The partnership between POWERGRID and SMBC also indicates the increasing role of green finance in the renewable energy sector. With more financial institutions supporting sustainable development, projects like this green loan will accelerate India’s transition to a low carbon economy.
Such collaboration highlights the necessity of green finance in the path toward a more sustainable and less carbon-intensive future. The most recent equity transfer to PGInvIT also further underscores POWERGRID’s ongoing measures to streamline and optimize its operation and asset use.