SBP extends financing scheme for renewable energy projects

KARACHI: The State Bank Pakistan (SBP) has announced to extend the financing scheme for renewable energy for next two years.

The SBP announced the scheme for financing power plants using renewable energy in 2009, with a view to promote renewable energy projects in the country. The scope and financial mechanism were revised several times to make it more attractive to borrowers and financing banks/DFIs.

The objective of the scheme is to lend support in addressing the dual challenge of energy shortage and climate change through the promotion of renewable energy. The SBP financing scheme for renewable energy and Islamic financing facility for renewable energy expired on June 30, 2022.

Therefore, the SBP has decided to extend the validity period of the SBP renewable financing scheme.

Financing scheme for renewable energy and Islamic financing facility for renewable energy has been extended for two years i.e. up to June 30, 2024”, the SBP said in a circular.

It may be mentioned here that Pakistan’s economy is 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 the 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 i.e. use of indigenous resources especially renewable energy in order to ensure sustainable banking and development. The scheme provides concessionary financing for large renewable energy power projects as well as for small scale renewable energy solutions.

Copyright Business Recorder, 2022