India to launch clean energy equity fund of up to $2 billion - sources

The Indian government and three state-run firms will jointly set up an equity fund of up to $2 billion for renewable energy companies to tap into to help New Delhi meet its clean energy goals, two government sources told Reuters on Wednesday.

Private and public companies will be able to dip into an initial amount of more than $1 billion starting next fiscal year, said the sources with direct knowledge of the decision taken after a meeting of government officials more than a month ago. India's government hopes the Clean Energy Equity Fund (CEEF) will attract pension and insurance funds from Canada and Europe.

Around $600 million of the initial pool will come from the National Investment and Infrastructure Fund, under the finance ministry, and the rest from state entities NTPC Ltd, Rural Electrification Corp and the Indian Renewable Energy Development Agency, according to one of the sources.

The sources declined to be named as they are not authorised to talk to the media. Officials at the finance ministry, new and renewable energy ministry, NTPC, Rural Electrification, and Indian Renewable Energy Development Agency did not immediately respond to requests for comment.

Prime Minister Narendra Modi has set a target of raising India's renewable energy target to 175 gigawatts by 2022, more than five times current usage, as part of the fight against climate change by the world's third-biggest greenhouse gas emitter and to supply power to all of the country's 1.3 billion people.

The program will depend on getting as much as $175 billion in funding with 70 percent of that likely in bank loans and the rest as equity, the sources said.

The government reckons loans are not a problem but providing equity to investors may be difficult due to uncertainties over returns, one of the sources said.

"As we expand our clean energy capacity, there may be a shortage of equity next year," said the source. "Private equity is seen as risky in India but if the government itself creates a fund, that gives a lot of confidence."

India's clean energy push was set back earlier this year when U.S. solar company SunEdison filed for bankruptcy. The company is now looking to secure partners to see through its planned India projects.

Nevertheless, companies are still keen to invest in clean energy.

Japan's Softbank Corp, Taiwan's Foxconn and India's Bharti Enterprises have pledged to invest about $20 billion in India's renewable sector. Global solar giants like First Solar Inc, Trina Solar Ltd and Fortum are also expanding their presence.

(Reuters)

Oil price hits $50, highest in eight weeks

Global oil benchmark, Brent crude, hit an eight-week high on Thursday as the world’s biggest producers prepared to discuss a possible freeze in production levels.

Brent, against which half of the world’s oil is priced, rose by $0.84 to $50.69 per barrel as of 7:58pm Nigerian time.

The benchmark has risen more than 20 per cent from a low in early August on news that the Organisation of Petroleum Exporting Countries and other key exporters may revive talks on freezing output levels when they meet in Algeria next month.

The rally has also been driven by short covering, as speculators including hedge funds and other money managers have amassed record short positions.

Many OPEC members, including Nigeria, have been hurt badly by a collapse in oil prices over the last two years. While some Gulf oil exporters have very low output costs, other producers such as Iran and Venezuela need oil prices above $100 to balance their budgets.

“With the lack of investment from outside oil companies, the sovereigns will be the best hope to raise production next year in a situation where it is likely that demand will exceed global output and that in and of itself is a reason that a production freeze at current levels still matters,” a senior energy analyst at Price Futures Group, Phil Flynn, was quoted by the CNBC as saying.

OPEC members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria on September 26-28.

Brent crude had on June 8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last October.

But it later fell to as low as $43 on July 27 after official United States energy data showed an unexpected glut of oil in storage.

Oil prices have rallied from lows of under $28 per barrel in January to trade above the $50 per barrel mark in June, spurred by a string of international oil production outages in the second quarter that offered temporary respite from the global glut.

The return of oil production in Canada and Nigeria after supply disruptions, combined with a strengthening US dollar, later pushed the market into reverse and sparked fears that further losses could undermine the global price recovery.