SBP extends scope of refinancing scheme
A Reuters file image
The State Bank of Pakistan (SBP) has enhanced the scope of its refinance scheme for renewable energy by allowing financing under category III of the scheme to solar and wind-based energy selling companies.
In a statement issued on Wednesday, the central bank said in light of the feedback received from stakeholders, the size of the project established by vendors, suppliers and energy sale companies has been enhanced from one megawatt to 5MW.
“Accordingly, the cumulative financing limit has also been increased from Rs1 billion to Rs2 billion,” it said.
The central bank emphasised that the revision in the scheme was expected to not only attract fresh local and foreign investment in the renewable energy sector but would also facilitate the production of clean energy in the country, helping to manage climate change.
The central bank had announced the financing scheme for renewable energy in June 2016, aimed at helping to address challenges of energy shortages and climate change in the country.
The scheme earlier comprised two categories. Category 1 allowed financing for setting up renewable energy projects with capacity ranging from 1 to 50MW for own use or sale to the national grid or a combination of both.
Category II allowed financing to domestic, agricultural, commercial and industrial borrowers for the installation of renewable energy-based projects and solutions of up to 1MW for generating electricity for their own use or sale to the grid or a distribution company under a net metering mechanism.
Later in July 2019, the SBP introduced Category III for facilitating financing to vendors and suppliers for the installation of wind and solar systems of up to 1MW, and also launched a Shariah-compliant version of the scheme in August 2019.
Since the introduction of the scheme, the total outstanding financing under the scheme has reached Rs15.6 billion for 217 projects having the potential of adding 292MW of energy supply.
Published in The Express Tribune, July 23rd, 2020.
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