Pradhan Mantri Kusum scheme aimed at helping farmers with extra income from their barren and semi-fertile land through solar projects is facing hurdles from banks who are reluctant to finance the units.
Out of the 170 farmers who have signed agreements with DISCOMs to set up solar plants, only around 15 have started working on the projects and the rest are delaying it as they are unable to tie up bank funding.
A senior official at Rajasthan Renewable Energy Corporation Ltd (RRECL) said banks have developed cold feet to finance the projects because of two reasons.
First, he said, there are concerns that DISCOMs don’t have a good track record of paying for the power-on time, and second, in case of a default, they cannot confiscate the farmer’s land given the sensitivity of the issue.
“Land is good collateral. But since these are farmers, their land cannot be seized in case of a default. Banks want other collaterals for financing the projects, but farmers don’t have or give other assets. As per the agreement, DISCOMs buy the power, but the track record of their payments to other projects has been very poor. So, bankers are wary of these projects,” said the officials.
When TOI contacted a State Level Banking Committee (SLBC) official, he said the boards of the banks have not taken any decision to finance such projects.
“We have had a discussion on funding these projects but unless our boards decide and make a decision, we cannot lend to these projects,” said the official preferring anonymity.
The PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) Scheme was launched across the country in March 2019 and guidelines were issued in July same year. Rajasthan was the first state in the country to invite expression of interest from the farmers and complete the application process By March 2020.
Out of the 623 farmers selected based on their application, 201 have deposited the security money at Rs 5 lakh per megawatt. But only 170 have signed agreements with the DISCOMs.
Rajasthan Electricity Regulatory Commission (RERC) has fixed Rs 3.14 paisa per unit of power for these projects, which the industry feels rate is very low given the small size of the projects. Even investors are allowed to tie up with the farmers to set up the projects and pay a rental to the farmers.