State Bank of India warns tariff cut will stifle investment

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The State Bank of India (SBI), the largest lender in the country, has warned against plans to cut the price paid to solar electricity producers in the state of Gujarat.

The state owned electricity purchaser Gujarat Urja Vikas Nigam Ltd. (GUVNL) is looking for the price it pays to be reduced by 28% but the SBI has said a reduction would limit the availiability of funding for future projects.

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The case is currently with the regulator. A second hearing is scheduled for 5 August.

The fact that the case has been brought at all would have an “adverse impact on investors” Rajat Misra, senior VP of infrastructure at SBI Capital Markets told Bloomberg adding that the failure of a handful of projects could make the entire sector fall through.

Last week James Abraham, managing director of SunBorne Energy, one of the firms accused by GUVNL of making windfall profits, told PV-Tech that the case was dangerous for the industry.

“If you look at most of the investors, everyone is confident about how this is going to turn out. It’s an incredible waste of time and money and it creates uncertainty,” he said.

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