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Annexure -I
Name of the Scheme
PM KUSUM Scheme ( Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan )
Scope
The scheme will be operational on Pan India
Objectives of the Scheme
Ø For installation of Solar Pumps and Grid connected solar and other Renewable Energy Power Plants (REPP).
Ø For decentralization of Renewable Energy Power Plants, solar Agriculture water pumps and Solarisation of existing grid connected agriculture pumps.
Eligible Entities (EE)/ Borrowers
v Individual farmers/ SHGs, JLGs forming Group of Farmers/ Co-operatives of Farmers.
v Panchayats.
v Farmer producer Organizations (FPO), Water user associations (WUA).
v Other constitution of the borrowers permissible by Ministry of New and Renewable energy as explained below:.
v In case the eligible entities are not able to arrange equity required for setting up the Renewable Energy Power Plants (REPP), they can opt for developing the REPP through developer(s) or even through local DISCOM, which will be considered as Renewable Power Generator (RPG) / Eligible Entity.
v Hence, the Developers who are permitted by MNRE will form the Other Constitutions of borrowers.
v The acknowledgement received from MNRE on registration by the Eligible Entity in the online MNRE portal is the proof of approval. NO separate approved list is required.
Eligible Projects
1. Component A: Setting up of Decentralized Ground / Stilt Mounted Grid Connected Solar or other Renewable energy based Power plants of individual plant size from 500KW to 2 MW.
2. Component B: Installation of Standalone Solar Powered Agriculture Pumps of Individual capacity up to 7.5 HP for replacement of existing diesel Agriculture pumps/New pumps in other than dark zone areas.
3. Component C: Solarisation of Grid Connected Agriculture Pumps.
Type of Facility
Term Loan
Quantum of Loan, Margin / Beneficiary Contribution and Subsidy if any.
Project
Maximum Loan Component
Margin /Borrower Contribution
Front End Subsidy by Central & State in 50:50 ratio
Component A
70% of Project Cost
30% of Project Cost
Nil
Component B
10% of Project Cost
60% of Project Cost
Component C
Note: For Component B & C in Northern Eastern States, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand, Lakshadweep and A&N Islands, Central Finance Assistance (CFA) subsidy of 50% of the benchmark cost / the tender cost whichever is lower, of the standalone solar pump will be provided. The state Government will give subsidy of 30%, Farmer margin will be 10% and remaining 10% may be in the form of bank finance.
At present MoNRE, GoI, has laid down an expected Financial requirement under 3 components as mentioned below which are illustrative and not the threshold limit for acceptance of maximum allowed project cost in each component.
Project Costs: Component A: Rs.3.50 Crores per one MW.
Component B: Rs.3.25 Lakhs per Pump.
Component C: Rs.4.50 Lakhs per Pump.
The viability of the project under Component A shall be assessed at the project level and Project appraisal shall be conducted on Credit assessment, Project parameters etc. However, the extant credit policy guidelines to be followed. While conducting Project appraisal, sensitivity analysis with variables such as reduced power generation, reduction in sale price etc. shall be conducted and viable projects shall only be funded.
Example of assessment:
SNO
WORKING VARIABLES
COMP-B
COMP-C
1
Cost of project
325000
450000
2
30% SUBSIFDY FROM CG
97500
135000
3
30% SUBSIDY FROM SG
4
10% MARGIN FROM BORROWER
32500
45000
5
BANK FINANCE
(1-(2+3+4)
EMD of Rs.1 lakh/MW in the form of Bank Guarantee and PBG of Rs.5 lakh/MW under component A shall be considered as the part of total project cost and the extant guidelines for permitting the Bank Guarantee shall be followed.
Procedure for release of the front-ended Central and State Subsidy are as per our banks guidelines applicable for term loan/project finance.
Mode of Disbursement
Ø Component A: The disbursement shall be made directly to the MNRE approved manufacturers /suppliers of the systems along with the borrower’s margin.
Ø Since the MNRE approved list of such manufacturers/suppliers vary from state to state, branches can cross verify the vendor details from their nearest block office/ District Level Committee Office.
Ø Term loan disbursement in stages depending on schedule of implementation & end use verification should be done at every stage of disbursements. Relative invoices / bills for assets financed if any should be obtained and held on record.
Ø Component B & C : The disbursement shall be made directly to the MNRE approved manufacturers /suppliers of the systems subject to fulfillment of the following:
Ø Installation of the system and acceptance of the project completion report and release of full and final CFA.
Ø After obtaining a letter from the borrower to the effect that the system has been installed to his satisfaction.
Ø Authorizing the bank to disburse the loan amount to the supplier directly.
Ø The disbursement to be allowed only after due diligence of MNRE approved manufacturers/suppliers.
Ø Genuineness and cross checking of quotation should be done from the other sources like website of manufacturers / suppliers etc. before disbursement.
Rate of Interest
As applicable to Agriculture loans under Renewable Energy Equipment as per Bank’s guidelines on Rate of Interest on Advances applicable for amalgamated entity and updated from time to time.
Service Charges
As per extant guidelines on Service charges applicable to advances.
Delegated Authority
As per extant guidelines on Delegated Authority.
Credit Rating Norms
As per extant guidelines on rating.
Security
Primary Security
Collateral Security
1.Hypothecation of assets created out of Bank loan.
2.Mortgage of landed property where project is established.
3. Exclusive charge over the Power Purchase Agreement and Escrow account.
Note: Tri-partite agreement to be executed between DISCOMs, Borrower and Bank for receipt of sale proceeds of power produced to Escrow account with our Bank
1.The farmers / developers can also avail the benefit of CGTMSE by registering them as MSME duly complying the CGTMSE guidelines.
Accordingly, If the unit has Udyam Registration Certificate then it is eligible for coverage under CGTMSE.
Note: Benefit of credit guarantee coverage for loans offered under this Scheme shall be provided to the borrower under the Credit Guarantee Trust for Micro & Small Enterprises through the National Credit Guarantee Trustee Company under their usual terms & conditions.
2. In cases where mortgage ability of lease-hold land is not possible, equivalent amount of collateral to be obtained.
&
1.Hypothecation of assets created out of bank loan along with hypothecation of Benefitting crops.
2.Exclusive charge over the Power Purchase Agreement, Escrow account for component C.
Note: Tri-partite agreement to be executed between DISCOMs, Borrower and Bank for receipt of sale proceeds of power produced to Escrow account with our Bank.
Up to Rs1.60 lakhs – NIL
Above Rs1.60 Lakhs –
Mortgage of land (Accepted value of land should be more than 100% of loan amount) &/ or third party guarantee (means should not be less than 100% of loan amount).
Security documents
v DP Note
v SD-19 Term loan Agreement (Hypothecation of Movables)
v SD-18 General Term loan Agreement
v SD-01 letter of Guarantee
v AD-07, AD-08, AD-10, AD-11(Depending upon constitution)
v AD-12 Letter of undertaking not to alienate hypothecated goods
v Interest rate agreement – SD 24
v Mortgage deed– SD–14 (for SM) OR AD-13(wherever applicable)
v Letter of Continuity – AD 09(M)
v Letter of General Lien and set off – AD 02(A)
v Undertaking from borrower/Guarantor for disclosure to CIBIL
Any other document as stipulated in Sanction advice.
Repayment period (including Moratorium)
Component A:
Ø The loan will be repaid based on the estimated revenue from power generation with maximum period of 10 to 15 years including initial moratorium of 12 months.
Ø Repayment frequency will be Monthly / Quarterly based on cash flow as per tripartite with the DISCOM for the revenue generated from the power plant and other income of the farmer.
Ø However, interest is to be served as and when demanded.
Ø Date of commencement of commercial operations (DCCO) has to be clearly documented and recorded.
Ø Interest during moratorium period has to be serviced.
Component B & C:
Ø Repayable in Quarterly / Half Yearly / Yearly installments coinciding with over all income generation of farmers within a maximum period of 7 Years including moratorium period of 6 months.
Ø Repayment shall be based on income generation from power unit and crops grown by the farmers.
Convergence with Union Agri. Infrastructure loan Scheme (UAILS)
The Scheme for setting-up of standalone solar pumping system under Component-B and solarisation of grid connected agriculture pump under Component-C where such facility is created by group of farmers organized as self help group / joint liability group/water user association (if same is registered as SHG or JLG)/cooperatives and similar other forms being eligible for availing facility of Agriculture Infrastructure Fund as it creates community farming assets and can avail the benefits under UAILS scheme.
Implementation Period
As per the Guidelines issued by Ministry of New and Renewable Energy from time to time.
Insurance
Assets created by bank finance will be comprehensively insured with bank clause to their full value.
Due Diligence
Thorough due diligence of Borrower, Supplier & Land Record should be carried out as per extant guidelines on Due Diligence for amalgamated entity.
Post-sanction monitoring
Post-sanction inspection & periodical follow-up inspection to be undertaken and report should be prepared and keep on record as per the extant guidelines.
Key implementation guidelines of the Scheme
v The key features of the 3 components in PM-KUSUM scheme is elaborated in Annexure -II. For full details, the branches can refer the Implementation guidelines issued by Ministry of New and Renewable Energy vide Office Memorandum dated 22.07.2019 and in case of any ambiguity in interpretation of any of the provisions of these guidelines the decision of the Ministry shall be final.
Other Terms and Condition
v KYC norms & due diligence should be carried out by branch officials as per the extant guidelines.
v Pre-sanction inspection should be carried out by Branch officials to verify technical feasibility of the project.
v Post disbursement inspection should be carried out to verify end use of funds.
v Price of the equipment and correctness of the quotations to be cross checked from site of the company.
v All statutory approvals to be held as per the Scheme guidelines.
All applicable guidelines of the Bank on Agriculture term loans and the detailed implementation guidelines issued by Ministry of New and Renewable Energy vide Office Memorandum dated 22.07.2019 are to be strictly adhered to.
Classification
v Priority Sector: Agriculture- Farm Credit
ANNEXURE -II
Key Implementation guidelines of three components of PM-KUSUM scheme.
Ø The distribution companies (DISCOMs) will notify substation wise surplus capacity which can be fed from Renewable Energy Power Plants to the Grid and shall invite applications from interested beneficiaries for setting up the Renewable Energy Plants. DISCOMS will be shortlisting the eligible RPGs (Renewable Power Generators) for setting up REPP (Renewable Energy Power Plant).
Ø All eligible applicants will have to submit tariff bids within prescribed time. LoA (Letter of Agreement) will be awarded to all successful bidders.
Ø Within two months of the date of issue of LoA by DISCOM, the PPA (Power Purchase Agreement) will have to be executed by RPG. The PPA shall be valid for a period of 25 years from the date of COD (Commercial Operation Date).
Ø The RPG shall provide the following Bank Guarantees to DISCOM as mentioned below.
1. Earnest Money Deposit (EMD) of Rs.1 Lakh /MW in the form of Bank Guarantee along with EoI.
2. Performance Bank Guarantee (PBG) of Rs.5.00 Lakhs /MW within 30 days from the date of issue of Letter of Award.
Ø The selected RPG shall commission the solar power Plant within Nine months from date of issuance of LoA and in case of any extension, the extant guidelines shall be adhered to. In case any plant fails to achieve this milestone, DISCOM will encash the PBG. Hence branches to monitor closely and ensure implementation / achieving the Date of Commencement of Commercial Operation (DCCO) as per schedule and ensure timelines are adhered to.
Ø In case the Borrower are unable to arrange equity required for setting up of REPP, they can opt for developing the REPP through developer(s) OR even through local DISCOM which will be considered as RPG. In this case, the net worth of the developer should not be less than Rs.1.00 Crore per MW. In such cases the land owner will get lease rent as mutually agreed between the parties. This shall not be applicable to farmer cooperatives or Panchayats or FPOs /WUAs or farmers setting up REPP in their own lands.
Ø RPG is required to obtain necessary clearances as required for setting up the REPP from the state Government and other local bodies.
Ø The State Nodal Agency (SNA) will coordinate with states /UTs, DISCOMs, and farmers for implementation of the scheme. The SNA will assist the farmers in Project development activities including formulation of DPR, PPA/EPC Contracts, getting funds from financial institutions and responsible to coordinate the quarterly meetings of the state level committee to resolve the issues during implementation. The SNA will be eligible to get service charges of Rs.0.25 lakh per MW after commissioning of the projects.
Ø Solar or other renewable energy-based power plants of capacity 500KW to 2 MW are eligible.
Ø REPP should be preferably installed within 5 Km radius of substation to avoid transmission loss and high cost of sub-transmission lines.
Ø The site of the project should be preferably on barren /uncultivable own /lease land. Agriculture land is also permitted under the scheme provided that solar plants are installed in stilt fashion i.e. raised structure for installation of Solar panels with adequate spacing without affecting the farming activity.
Ø Ensure compliance of AMC and adequate training to the borrowing farmers on the technical knowhow on the plant systems by the vendors.
Ø The farmers are eligible to install standalone solar Agriculture Pumps of capacity up to 7.5 HP for replacement of existing diesel Agriculture Pumps /irrigation systems in off-grid areas, where grid supply is not available.
Ø Installation of new pumps shall also be permitted under this scheme except in dark zone areas.
Ø Priority would be given to Small and Marginal Farmers.
Ø Agriculture pumps of capacity higher than 7.5 HP may be allowed, however, the CFA (Central Finance Assistance) will be limited to the CFA applicable for pump of 7.5 HP.
Ø In order to minimize the water usage for irrigation purpose, preference will be given to the farmers using Micro Irrigation systems.
Ø The size of the pump would be selected on the basis of water table in the area, land covered and quantity of water required for irrigation.
Ø It will be mandatory to use indigenously manufactured solar panels with indigenous solar cell and modules. Further, the motor-pump-set, controller and balance systems should also be manufactured indigenously.
Ø DISCOMs /Agricultural Department / Minor Irrigation Department / any other department designated by state government will be the implementing agencies for this component.
Ø Implementing agencies are responsible for identification of beneficiaries (Demand aggregation for solar Agriculture Pumps through online portal), will submit proposals through online portal to MNRE for approval. Offline proposals will not be accepted, unless MNRE has given a general exemption from the requirement of online submission to any agency for any specific period of time.
Ø IAs will oversee the installation of systems, inspection and online submission of completion reports to MNRE.
Ø Selected Vendors shall be responsible for design, supply, installation and commissioning of solar agricultural pumps. Installation shall be completed within 12 months from the date of sanction by MNRE.
Ø Vendors will mandatorily provide AMC for a period of 5 years from the date of commissioning of the systems including insurance coverage for the installed systems against natural calamities and theft.
Ø The vendor should provide adequate training to borrower, real time monitoring, helpline, district level service centers and comply standards of performance in dealing with complaints /redressal mechanism.
Ø Individual farmers having grid connected agriculture pump will be supported to solarize pumps. Solar PV capacity up to two times of pump capacity in kW is allowed under the scheme. However, state may specify lower solar PV capacity in kW, which in any case shall be not be less than pump capacity.
Ø The farmer will be able to use the generated solar power to meet the irrigation needs and the excess solar power will be sold to DISCOMs. Accordingly Tri-partite agreement to be executed between DISCOM, Borrower and Bank for receipt of sale proceeds of power produced to Escrow account with our Bank
Ø In order to minimize the water usage for irrigation purpose, preference will be given to the farmers using Micro irrigation systems or covered under Micro irrigation schemes or who opt for Micro irrigation systems.
Ø The solar power fed in the grid and solar power utilized by farmer both will be accounted for fulfillment of Solar RPO by the DISCOM.
Ø In case of Dark Zones / Black Zones only existing grid connected pumps will be solarized provided they use micro irrigation technique to save water.
Ø DISCOM will purchase excess power from the farmer at the rate decided by the respective state / SERC (State Electricity Regulatory Commission). DISCOM will ensure must run status to the solarized feeders and will keep such feeders “ON” during sunshine hours of a day.
Ø Selected vendors shall be responsible for all aspects of solarization viz., design, supply installation and commissioning. Vendors will mandatorily provide AMC for a period of 5 years from the date of commissioning of the systems including insurance coverage for the installed systems against natural calamities and theft.
Ø The farmer will be able to use the generated solar power to meet then irrigation needs and the excess solar power will be sold to DISCOMs and accordingly Tri-partite agreement to be executed between DISCOM, Borrower and Bank for receipt of sale proceeds of power produced to Escrow account with our Bank under component C.
For more details please contact our nearest branch