Revisions made to SBP Financing Scheme
The State Bank of Pakistan, in a bid to promote investment, has decided to ease conditions for renewable energy solution providers under its Refinance Scheme for renewable energy.
A press release issued by the SBP stated, “The requirement of AEDB certification has been relaxed for Renewable Energy Investment Entities that do not undertake installations on their own but hire services of installers/vendors for installation of RE projects/solutions.”
These details of vendors/ suppliers/engineering procurement and construction contractors of these RE-IE will, however, still be required to be certified under AEDB certification regulations.
An Renewable Energy Investment Entity is an entity that establishes renewable energy projects for onward leasing/renting out/selling on deferred payment basis or sells electricity generated from these projects to end users.
In July 2019, the State bank revised its SBP Financing Scheme for Renewable Energy with an aim to address the challenges of energy shortages and climate change.
A shariah complaint version of the scheme was introduced later in the year as well.
According to the SBP, the policy now comprises three categories.
Category I: Financing is allowed for setting up of renewable energy power projects with capacity ranging from 1 MW to 50 MW for personal use or selling of electricity to the national grid or a combination of both.
Category II: Financing is allowed to domestic, agriculture, commercial and industrial borrowers for installation of renewable energy based projects/solutions of up-to 1 MW to generate electricity for own use or selling to the grid/distribution company under net metering.
Category III: Financing is allowed to vendors/suppliers/energy sale companies for installation of wind and solar systems/solutions of up to 5 MW.
Since the inception of the scheme, 717 projects having potential of adding 1,082 MW of energy supply through renewable sources have been financed. By June 30, 2021, the total outstanding financing under the scheme amounted to Rs53 billion.
“While there is substantial take up under Category I and II, solution suppliers under Category III faced problems,” The SBP said. Consequently, the above mentioned revisions were made to the category for the production of clean energy.
Details of revisions made in category III of the Renewable Energy scheme are available at the SBP website.