Energy Efficiency Services Limited (EESL) has issued a strong call for the implementation of robust payment security mechanisms, citing them as the critical missing link in India’s transition to sustainable energy infrastructure. During the Andhra Pradesh Reimagining Public Finance Summit, hosted by the Finance Department, Government of Andhra Pradesh and powered by Elets Technomedia, Akhilesh Kumar Dixit, CEO of EESL, highlighted the severe liquidity challenges hampering the sector.
He revealed that EESL is currently grappling with outstanding dues exceeding ₹4,000 crore, largely attributed to the limited paying capacity of Urban Local Bodies (ULBs) under the traditional CAPEX model. This financial strain has made private investors wary of entering the energy efficiency market without sovereign or structural guarantees.
“The real problem is not a lack of investors, but the lack of a payment security mechanism,” he explained. “Without surety, financing these projects becomes incredibly tough. Even deep-pocketed investors have not entered this field aggressively because of this risk.”
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The CEO pointed to the limitations of previous financing models, noting that carbon trading revenues did not materialize as expected, leading to losses. As the industry shifts toward ESCO (Energy Service Company) and RESCO (Renewable Energy Service Company) models, the need for guarantees is more pressing than ever.
The statement comes as EESL prepares to open tenders for 10,900 electric buses across eight cities. He further noted that even major manufacturers, such as Tata Motors, have expressed hesitation to finance such large-scale deployments on their own balance sheets without adequate payment security. EESL argues that for India to realize its ambitious energy transition goals—potentially requiring over ₹2 lakh crore in investment—the government must establish a regulatory safety net similar to those successfully utilized in the power sector.
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