What does IREDA need to fund a compressed biogas plant under SATAT?

Question

Accepted Answer

Two signed contracts come first: a CBG sale agreement with an oil marketing company carrying a 100 percent offtake guarantee, and a registered feedstock supply agreement, each running longer than the loan. IREDA then lends up to 70 percent of project cost, repaid over up to 10 years or 80 percent of the sale contract's life, whichever is shorter. A contract agreement with an oil marketing company for sale of CBG with a 100 percent offtake guarantee, for a term longer than the loan. Legally binding feedstock agreements, with adequate stamp duty and registered at the competent authority's office, covering raw material supply for the whole loan tenure. These must be in place before disbursement. All statutory clearances for building and running the plant. Minimum loan ₹50 lakh, in IREDA's Financing Norms updated to 1 October 2026. Up to 70 percent of project cost, with a 70:30 debt to equity ratio and a fixed asset coverage ratio of at least 1.25. At least half of the promoters' contribution brought in upfront as pure equity. Repayment up to 10 years, excluding moratorium and construction, or 80 percent of the CBG sale contract's life, whichever is less. Moratorium up to 1 year; construction period up to 1.5 years. Interest under IREDA's policy, set when the loan is sanctioned. Mortgage of the plant's immovable assets and hypothecation of movable assets, existing and future. A trust and retention account into which oil marketing company payments are deposited, plus a debt service reserve built up under IREDA's norms. One or more collateral options: urban residential or commercial land, a pledge of at least 51 percent of shares, personal or corporate guarantees, or a bank guarantee or fixed deposit of at least 10 percent of the IREDA loan. Income from by-products such as manure may be counted, but the plant must still show an annual debt service coverage of at least 1.0 and an average of at least 1.10 over the loan without any by-product sales that are not under contract. Any central or state subsidy is adjusted against the loan, and any interest subsidy is passed on to the project. A lender's independent engineer monitors construction, and you report production and sales to IREDA every month. IREDA's CBG page notes that RBI includes loans to start-ups of up to ₹50 crore for CBG plants in priority sector lending. Securities and terms can be aligned with a lead lender to IREDA's satisfaction.

What does IREDA need to fund a compressed biogas plant under SATAT?

Contracts IREDA wants before it lends

The loan in numbers

Security

How IREDA tests the cash flow

If a bank lends alongside IREDA

A ₹30 crore plant with a 10-year sale agreement (assumed figures)

What Senseible does here