ISLAMABAD: The World Bank (WB) has shown willingness to extend financing for government initiative to replace inefficient fans which will cost over Rs300 billion, official sources told Business Recorder.
In this regard, a meeting was held in the PM’s Office under the chairmanship of SAPM on Governance Effectiveness Jehanzeb Khan to streamline the implementation of energy efficiency initiatives.
Power Division presented the initial concept of fan replacement program. He apprised that the program envisages replacement of 88 million fans (50m fans in rural households and 38m fans in urban households) at a cost ranging from Rs300 billion (25pc down payment and 75pc bank financing).
Additional Secretary Power Division suggested that NEECA may lead the initiative through a dedicated Project Management Unit (PMU). Discos can facilitate in recovery of money through electricity bills, data reconciliation, and verification of consumers and development of payment gateways between banks, consumers, Discos and vendors.
Additional Secretary Science & Technology Division opined that lower segments may be targeted through BISP and higher segments may be convinced to replace through public awareness and advocacy campaign. He pointed out that provision of efficient fans may be facilitated through BISP, with their beneficiaries as the first to receive them.
Joint Secretary Finance Division highlighted that Poverty Alleviation Division has already been provided additional Rs40 billion for BISP, which may be utilized for the program. She also suggested that the possibility of financial mechanism through Karandaz should be explored.
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MD NEECA highlighted that the program may also attract carbon financing especially in the wake of current Carbon Credit Rates hovering at $4-6 per unit. He pointed out that gas companies should be also engaged in this discussion as they are ensuring provision of conical baffles and timer devices through on-bill financing mechanism.
Representative from State Bank of Pakistan (SBP) highlighted that the financing rate will range from 21-22 per annum for commercial banks - which may not be willing to finance such a small outlay. In case of Micro Finance Bank, the financing rate will inflate to well above 30pc, making the program exorbitantly expensive.
World Bank team briefed the participants regarding 10m Fans Initiatives - a flagship energy conservation initiative.
This initiative will cost around Rs81 billion. World Bank showed its willingness to fund the initiative. Regarding the eligibility criteria, it was said that the fans will be provided to consumers with consumption of less than 200 kWh per month. These fans will save 5.26 billion kWh per annum - entailing a saving of Rs130.6bn per annum in terms of electricity cost.
Rapping up the meeting, the Chair appreciated all the participants for the useful discussion and especially Additional Secretary Power Division for conducting a detailed pre-feasibility study.
The Chair highlighted that “Efficient Utilization of Energy” is the over-arching objective of the program. However, to achieve the objective, the following issues require deliberations: (i) workable mechanism to help households pressed by exorbitant power tariffs through replacement of energy efficient appliances; (ii) support for the industry to build capacity for producing energy efficient appliances; (iii) marketing strategy/ campaign to bring about behavioural change of households towards energy efficient appliances through awareness campaign and; (iv) a trackable mechanism for flow of money through which the beneficiaries can directly procure the fan from vendor/ retailer of their choice.
After detailed discussion, the meeting decided that NEECA will arrange a consultation workshop with all stakeholders including Ministry of Science and Technology, Ministry of Climate Change, Power Division, Petroleum Division and Poverty Alleviation Division.
The output of the workshop should be a draft PC-1. The procurement ought to be in line with World Bank Procurement Guidelines so that retroactive financing could be tapped. It was also decided that NEECA would develop implementation plan for the program keeping in view that recovery may not start during summer months and 3-4 grace months may provided.
The meeting also decided that inefficient manufacturers may be phased out through stringent standards. PSQCA will present the detail mechanism for enforcement of these standards. Ministry of Industries and Production in consultation with provincial governments shall also ensure enforcement of standards. Mandatory labelling regime for energy efficiency will be ensured.
The meeting was attended by Secretary Industries and Production, Additional Secretary Power, Additional Secretary Science & Technology, Provincial Energy Secretaries, MD National Energy Efficiency & Conservation Authority (NEECA) and senior level representatives from Prime Minister’s Office and the World Bank.
Copyright Business Recorder, 2023