The State Bank of Pakistan (SBP), in a bid to counter climate change and enhance renewable energy generation, has provided financing worth Rs74 billion to over 1,175 projects under its refinance scheme that is aimed at promoting investment in renewable energy.
The projects have a combined capacity of 1,375MW, according to data available with Business Recorder, and come at a time when Pakistan is looking to make efforts to tackle climate change and reduce dependence on fossil fuels.
In similar efforts, the central bank had also revised its SBP Financing Scheme for Renewable Energy in July 2019, and launched a Shariah-complaint version in August 2019.
“The scheme is helping fund a large number of renewable energy projects,” said the SBP.
Under the financing scheme for renewable energy, financing at a maximum mark-up rate of 6% is provided.
The scheme comprises of three categories: Under the first, financing of up to Rs6 billion, for 12 years with 2 years grace period, is allowed for setting up of renewable energy power projects with capacity ranging from 1 MW to 50 MW for own use, selling of electricity to the national grid or a combination of both.
Under Category II, financing of up to Rs400 million for 10 years with 3-month grace period, is allowed for installation of renewable energy-based projects/solutions of up to 1 MW to generate electricity for own use or selling to the grid.
Under Category III, financing of up to Rs2 billion, for 10 years, is allowed to vendors/suppliers/energy sale companies for installation of wind and solar systems/solutions of up to 5 MW for onward selling/renting to customers/grid.
Pakistan has been looking to increase the share of renewable energy in its power generation. At present, coal, hydel, nuclear, gas, furnace oil and RLNG have a majority share in power generation.