PFC, JBIC Sign INR 3,500 Crore Loan Agreement to Boost Clean Energy Projects in India

India’s largest government-owned financial institution for the power sector, Power Finance Corporation (PFC), has entered into a significant loan agreement with the Japan Bank for International Cooperation (JBIC) - valued at 60 billion Japanese Yen (approximately ₹3,500 crore) to finance clean energy initiatives in India. 

The agreement, which was formalized in Tokyo during Japan visit of Indian Prime Minister Narendra Modi, entails that JBIC’s share of the loan is JPY 36 billion, with the remainder co-financed by prominent private Japanese banks including Sumitomo Mitsui Banking Corporation, The Joyo Bank, Kansai Mirai Bank, and Kiraboshi Bank. Notably, JBIC also provides guarantees for the privately co-financed portion.

Focus on Sustainable Biofuel Production in Assam

A major portion of the loan will support the establishment of Assam Bio Ethanol Pvt Ltd’s pioneering second-generation bio-ethanol and chemicals plant located in Assam. 

The project, backed by JBIC’s GREEN operations, will enable the production of biofuels in Golaghat district using bamboo sourced from the Northeastern states of India. This bioethanol will be blended with gasoline as part of India’s ongoing effort to reduce fossil fuel dependence and mitigate climate change impacts.

India’s National Policy on Biofuels aims to achieve a 20 percent ethanol blend (E20) in gasoline by 2025 to lower emissions and promote renewable energy. The government roadmap supports nationwide adoption of E20 by 2025, aligning perfectly with this funding initiative. 

Furthermore, the loan promotes regional development in the Northeastern states through the government’s Act East Policy, emphasizing economic growth, connectivity, and strengthening ties with neighboring countries.

Industrializing Bamboo from Northeast India

The project provides bamboo farmers in the Northeastern region an opportunity to enhance their income by industrialising bamboo, a key regional product. This advancement not only supports livelihood improvements but also aligns with environmental objectives because ethanol produced from bamboo has a lower environmental footprint than conventional ethanol sources. 

PFC operates under India’s Ministry of Power and is the principal government-owned non-banking financial company (NBFC) serving the power sector. Holding the largest asset base among NBFCs in India, PFC plays a vital role in funding and facilitating clean energy projects in the country.