The State Bank of Pakistan (SBP) has announced extension in the financing scheme for renewable energy by three years to June 30, 2022 to promote renewable energy projects in the country. The scheme will be available for power generation using alternative/renewable energy sources, ie, solar, wind, hydro, biogas, bio-fuels, baggasse cogeneration, and geothermal as fuel for financing of up to Rs 6 billion.
Revised SBP financing scheme for renewable energy was launched in June 2016 with an objective to lend support to addressing dual challenge of energy shortage and climate change through promotion of renewable energy. The scheme has expired on June 30, 2019. The scheme has been further revised with a view to streamlining features and incentives and expanding the scope of the scheme to make it more attractive for borrowers and financing banks/DFIs.
The State Bank recently sought feedback of stakeholders on demand as well as scope and features of the scheme and based on this feedback, the SBP has decided to extend the expiry period of the scheme up to June 30, 2022. In addition, the SBP has aligned the scope and features of the scheme with recommendations of the stakeholders and now the scheme is available under three categories.
Under the Category I, prospective sponsors, desirous of setting up renewable energy power projects with a capacity ranging from more than 1 MW and up to 50 MW for their own use or selling of electricity to the national grid including distribution companies or combination of both will get financing up to Rs 6 billion for a single project. The SBP Refinance will be up to 100 percent of total financing (debt) of an eligible renewable energy power project of up to 20 MW and up to 50 percent financing (debt) of an eligible renewable energy power project of more than 20 MW.
Under the first category, financing will be provided for maximum twelve (12) years, including maximum grace period of two (02) years. Maximum end user rate will be 6 percent including 3 percent SBP Service Charges or Refinance Rate and bank/DFIs maximum spread of 3 percent. The borrower will be required to pay principal amount in quarterly or half yearly installments and mark-up will be repayable on quarterly basis.
Under category-II, maximum financing will be provided up to Rs 400 million for a single borrower or prospective sponsors, desirous of installing renewable energy source based projects/solutions for generation of electricity up to 1 MW. The SBP refinance will be up to 100 percent of financing to the eligible borrowers and Maximum end user rate will be 6 percent including 2 percent SBP Service Charges or Refinance Rate and bank/DFIs maximum spread of 4 percent.
Financing under category-II will be provided for maximum ten (10) years, including maximum grace period of three (03) months and principal repayable will be made monthly, quarterly or half yearly installments. While, mark-up will be repaid on monthly or quarterly basis. Category III includes vendors and suppliers certified under AEDB Certification Regulation 2018 for installation of wind and solar systems on lease basis or selling of electricity to ultimate owners/users.
As the salient features of financing facility under this category maximum loan up to Rs 01 billion will be provided for a single vendor/supplier and the SBP refinance will be up-to 100 percent of financing to the eligible borrowers. Maximum end user rate, under Category III, will be 6 percent including 3 percent SBP Service Charges or Refinance Rate and bank/DFIs maximum spread of 3 percent. The maximum financing will be for ten (10) years, including maximum grace period of three (03) months. Principal repayable will be monthly, quarterly or half yearly installments and mark-up will be paid on monthly or quarterly basis.
State Bank will allocate annual limits (financial year basis) to the banks/DFIs under the Scheme against their applications submitted latest by 15th May each year. The application for sanction of limit shall accompany a duly filled-in requisition form detailing pipeline of projects for which financing is expected to be disbursed during the year. For the financial year 2019-20, requests for sanction of limits may be submitted within next 30 days, the central bank said.
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