Alternative Energy Development Board (AEDB) and the Asian Development Bank (ADB) jointly launched a Renewable Energy Guarantee Facility for Pakistan. The facility will provide in aggregate up to $200 million equivalent in guarantees to help mobilise commercial debt from domestic and international lenders needed to finance wind and other Renewable Energy (RE) power plants (Projects) in Pakistan.
Such finance would otherwise be too costly or simply not available due to current market concern about 'off-take' risks associated with the power sector in Pakistan. The Facility will speed up the pace of development of RE sector in Pakistan. The Renewable Energy Guarantee Facility will support the Government's Renewable Energy Development Sector Investment Programme being implemented by the AEDB.
The Facility will support 'shovel ready' wind and other renewable energy projects operated by independent power producers (IPPs), which should have a cumulative generating capacity of 150MW to 250MW by the end of 2015. Guarantees issued by ADB will help international and local banks make loans to the IPPs for amounts of between $15m and $120m equivalent with tenors of up to 15 years that are denominated in PKR or USD.
Each guarantee, however, will be carefully targeted so that it only covers the risk of non-payment by an IPP of scheduled principal and interest under the loan as a result of non-payment by CPPA of amounts due under energy purchase agreements (EPAs) for energy delivered or energy that could have been delivered but was not taken.
AEDB will accept Preliminary Applications from RE Project sponsors (or their authorised agents) that have a valid Letter of Intent (LOI) from AEDB, have an IPP site allocation endorsed by AEDB and are expected to meet the eligibility criteria applied by AEDB and ADB. These will be accepted until 30 April 2011.-PR
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