REC Limited, a public infrastructure finance company involved in financing power projects, has entered into an agreement with Germany-based KfW Development Bank to avail official development assistance (ODA) loan of $169.5 million.

The agreement was signed under the Indo-German Bilateral Partnership after the Ministry of Finance’s approval.

REC will utilize the proceeds of the ODA loan to part-finance solar generation projects in India at competitive interest rates. The loan is the fifth credit line signed between REC Limited and KfW to finance power sector projects and the third for renewable energy projects.

The infrastructure finance company said it continuously reshapes its policies to align with market requirements. It also develops financial solutions and mechanisms that create scalable ways to channel private and public investment in the renewable energy space. Among all the segments being financed by the company, it offers the lowest interest rates to the renewable energy sector.

REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric co-operatives, and private sector utilities.

KfW Development Bank finances and supports programs and projects that mainly involve public sector players in developing countries and emerging economies – from conception and execution to monitoring their success.

Last year, REC received approval to raise its overall borrowing limit to ₹4.5 trillion (~$60 billion). The foreign currency borrowing allowed is equivalent to $12 billion (~₹884 billion).

In October this year, REC raised a $75 million five-year secured overnight financing rate linked syndicated term loan from Sumitomo Mitsui Banking.

REC is among three non-banking financial institutions whose letters of undertaking can be used as bank guarantees in renewable energy tenders. The other two are Indian Renewable Energy Development Agency Limited and Power Finance Corporation Limited.

Earlier this month, KfW Development Bank announced plans to raise €80 billion (~$90.35 billion) to €85 billion (~$96 billion) of funding in 2022, which will include at least €10 billion (~$11.3 billion) of green bond issuance.