Renewable energy: SBP revises financing scheme

The State Bank announced the scheme for financing power plants using renewable energy in 2009, with a view to promoting renewable energy projects in the country. Keeping the low utilisation of the scheme in view, the scope and financial mechanism have been revised to make it more attractive to borrowers and financing banks/DFIs.

Pakistan’s economy is currently facing the dual challenge of energy shortage and climate change. The inadequate supply of energy has severely impacted the growth of industries/businesses and the welfare of public in general. Similarly, the effects of climate change have been observed in the form of devastating floods, droughts, heat waves and changing weather patterns. These changes essentially inhibit our ability to develop sustainably. In order to overcome these challenges, the SBP decided to promote green banking, ie, use of indigenous esources, especially renewable energy in order to ensure sustainable banking and development. For this purpose, the scheme has been amended based on the feedback received from various stakeholders. The scheme will provide concessionary financing for large renewable energy power projects as well as for small scale renewable energy solutions.

The scheme shall be available for power generated by using alternative/renewable energy sources (solar, wind, hydro, biogas, bio-fuels, bagasse cogeneration, and geothermal as fuel). Financing facilities under the scheme will be provided through all commercial banks and Development Finance Institutions (DFIs). The State Bank shall provide refinance to each bank/DFI on service charge (mark-up) basis in terms of Section 17 (2) (d) read with section 22 of State Bank of Pakistan Act 1956. Refinance shall be allowed to banks/DFIs by the concerned office(s) of SBP BSC (Bank) on submission of documents as may be required by State Bank of Pakistan.
Source: Business Recorder