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Tag: renewable energy

  • SBP softens conditions for renewable energy financing

    SBP softens conditions for renewable energy financing

    KARACHI: The State Bank of Pakistan (SBP) has relaxed financing conditions to promote investment in renewable energy solutions by companies.

    The SBP in a statement on Monday said that it had softened the conditions for renewable energy solution providers under its Refinance Scheme for Renewable Energy.

    Now, all Renewable Energy Investment Entities (RE-IEs) interested in installing renewable energy projects/solutions are allowed to avail refinance under category III of the scheme.

    An RE-IE is a business entity (including vendors and suppliers) whose business is to establish renewable energy projects for onward leasing/renting out/selling on deferred payment basis or selling of electricity generated from these projects to end users.

    It may be recalled that with an aim to help address the challenges of energy shortages and climate change, SBP revised its SBP Financing Scheme for Renewable Energy in July 2019.

    SBP also launched a Shariah complaint version of the scheme in August 2019. The scheme now comprises of three categories. Under Category I, financing is allowed for setting up of renewable energy power projects with capacity ranging from 1 MW to 50 MW for own use or selling of electricity to the national grid or a combination of both.

    Under Category II, financing is allowedto 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.

    Under Category III, financing isallowed 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. As of June 30, 2021, total outstanding financing under the Scheme is Rs53billion. While there is substantial take up under Category I & II, solution suppliers under Category III faced problems.

    Accordingly, in light of the feedback received from stakeholders including renewable energy solution suppliers, Alternate Energy Development Board, NEPRA and banks, the requirement of AEDB certification has been relaxed for RE-IEs who do not undertake installations on their own but hire services of installers/vendors for installation of RE projects/solutions.

    However, vendors/ suppliers/engineering procurement & construction (EPC) contractors of these RE-IE will still be required to be certified under AEDB certification regulations. It is expected that this revision in category III will further facilitate in production of clean energy.

    SBP makes biometric mandatory for forex transactions
  • Renewable energy projects avail financing Rs36bn for producing 850MW

    Renewable energy projects avail financing Rs36bn for producing 850MW

    KARACHI: Dr. Reza Baqir, Governor, State Bank of Pakistan (SBP) has said that as of February 2021 financing of around Rs36 billion have been extended for 521 projects producing approximately 850 MW.

    He was addressing a webinar jointly hosted by SBP and Unilever Pakistan to create awareness about the SBP’s Renewable Energy Financing Scheme which has been used by Unilever to convert 30 percent of its factories to renewable energy

    Dr Reza Baqir has said thatfinancing for sustainable development is the need of the hour and Financial Institutions have a crucial role in this area.

    Dr. Baqir stated that the Pakistan faces challenge as a result of climate change and adopting prevention strategies are of paramount importance.

    In this regard he pointed out that the SBP has issued Financing Scheme for Renewable Energy with a view to promote renewable energy projects.

    Governor Baqir highlighted the key features of the scheme that can be beneficial for the stakeholders ranging from the corporates to the individuals. The scheme has evolved over time and received strong response and Dr. Baqir urged participants to benefit from this facility.

    Pakistan is member of Global Sustainable Banking Network (SBN) since2015 and green/ sustainable finance policies are being aligned with global environmental and social standards and best practice.

    Chairman and CEO of Unilever Pakistan, Amir Paracha in his address said that the Renewable Energy Financing Scheme offers tremendous social and business value to companies and producers both in terms of their environmental footprint and cost savings ambitions.

    The financing scheme in Pakistan has enabled them to fast-track their renewable energy goals whilst remaining financially feasible. He mentioned that Unilever is sharing this as a best practice for other corporate players, as its sustainability in its best form. They are benefitting the country and environment whilst their own business has seen a positive impact.

    SBP’s Renewable Energy Financing scheme is an innovative solution that aims to encourage investments for clean energy in Pakistan. This is part of the country’s efforts to diversify the energy mix and reduce climate change impact.

    The scheme offers varied financing options ranging from Rs400 million to Rs6 billion for a range of entities and persons. This includes captive energy units as well as commercial projects and individual consumers who may share excess production with the national grid.

    The SBP issued its Financing Scheme for Renewable Energy in 2016 and based on positive feedback the scheme was revised in July 2019. SBP also introduced a Shariah compliant version of this Scheme in August 2019.

    The scheme aims at meeting Pakistan’s growing electricity demand through renewable energy and promoting clean energy projects as part of Sustainable Development Goals (SDGs).

    It promotes the use of indigenous resources such as wind, solar and hydro to generate electricity as well as encourages the use of renewable energy at consumer level to support NEPRA’s Net Metering Regulations.

    As part of this financing scheme, Unilever availed a loan of Rs833 million through Standard Chartered Bank to set up 8.85 MW of renewable energy production facilities across four factories in Punjab. This effort is in line with Unilever’s global mission for carbon neutrality and sustainability in its manufacturing process.

    Unilever has committed to remove carbon emissions from operations by 2030, as well as net zero emissions from their products by 2039, which will be 11 years ahead of the 2050 Paris Agreement.

    The renewable energy solution was implemented by Reon Energy Limited, producing 13 million KW units of energy per year, resulting in annual savings of PKR 182 million and a reduction in 5,075 tons of CO2 emissions. The impact of projects such as the one implemented by Unilever prove the benefits of adopting renewable energy solutions by the wider industry in Pakistan.

    The webinar was attended by various chambers, media organizations, Presidents and CEOs of banks, energy experts, representatives of Pakistan Business Council and senior officials from SBP.

  • SBP enhances financing limit to Rs2 billion for renewable energy schemes

    SBP enhances financing limit to Rs2 billion for renewable energy schemes

    KARACHI: The State Bank of Pakistan (SBP) has increased cumulative financing limit to Rs2 billion and also enhanced project size to 5MW.

    According to a statement issued on Wednesday, the central bank said it had enhanced the scope of its Refinance Scheme for Renewable Energy by allowing financing under category III of the scheme to solar and wind based energy sale companies.

    In light of the feedback received from stakeholders, the size of the project established by vendor/ supplier/ energy sale company has been enhanced from 1 MW to 5 MW. Accordingly, the cumulative financing limit has also been increased from Rs.1 billion to Rs.2 billion.

    SBP Financing Scheme for Renewable Energy was announced in June 2016with an aim to help addressing the challenges of energy shortages and climate change in the country.

    The scheme comprised of two categories: Category 1 allowed financing for setting up of renewable energy power projects with capacity ranging from 1 MW to 50 MW for own use or selling of electricity to the national grid or combination of both.

    Category II allowed financing 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.

    Later, in July 2019, SBP introduced a new Category III for facilitating financing to vendors/suppliers for installation of wind and solar systems/solutions of upto 1 MW. SBP also launched a Shariah complaint version of the scheme in August 2019.

    Since the introduction of the scheme, total outstanding financing under the Scheme has reached to Rs.15.6 billion for 217 projects having potential of adding 292 MW of energy supply.

    This revision in the scheme is expected to not only attract fresh local and foreign investment in the sector but also facilitate production of clean energy in the country, helping in managing climate change.

  • SBP issues Islamic financing scheme for renewable energy projects

    SBP issues Islamic financing scheme for renewable energy projects

    KARACHI: State Bank of Pakistan (SBP) on Wednesday issued a new scheme of Islamic financing for renewable energy power projects.

    The central bank said that it had issued IH&SMEFD Circular No. 01 dated February 22, 2019 introducing Mudarabah based ‘Islamic Financing Facility for Renewable Energy (IFRE)’ for Islamic Banking Institutions (IBIs) and DFIs having authorized Islamic financing operations.

    Now an updated Islamic Financing Facility for Renewable Energy (IFRE) is being issued. This updated IFRE shall supersede and replace the Facility issued vide above-mentioned Circular.

    The financing under IFRE is now available to the customers under three categories, as given below:

    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, selling electricity to the national grid (including distribution companies) or combination of both.

    Category II: Prospective sponsors desirous of installing renewable energy source based projects/ solutions for generation of electricity up-to 1 MW.

    Category III: 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.

    The SBP shall make Mudarabah investment in general pool of Participating Islamic Financial Institutions (PIFIs) under IFRE. Mudarabah investment of SBP in IFRE shall be available upto maximum financing limit of eligible projects as prescribed under each category of the Scheme.

    IFRE shall be effective immediately and financing shall be available for projects achieving financial close under Category I and new sanctions under Category II or III after date of issuance of this Circular and up-to June 30, 2022 only.

    The IBIs and DFIs having authorized Islamic financing operations under permission of SBP may submit their requests for the status of Participating Islamic Financial Institution (PIFI) keeping in view the criteria given in the facility.

    They may also apply for allocation / assignment of limit for the current financial year. These requests may be submitted latest by 15th May each year. For the financial year 2019-20, these requests may be submitted within 30 days from the date of issuance of this Circular.

    The IBIs and DFIs having authorized Islamic financing operations under permission of SBP which have already submitted their requests for status of PIFI and allocation of limit under earlier version, issued vide IH&SMEFD Circular No. 01 dated February 22, 2019, need not resubmit their requests unless they desire to revise amount of their requested limits.

    However, they will be required to submit their updated operations/process manual aligned with this Scheme.

  • SBP revises refinance scheme for renewable energy

    SBP revises refinance scheme for renewable energy

    The State Bank of Pakistan (SBP) on Friday announced a revised refinancing scheme aimed at boosting renewable energy projects. The new scheme sets a maximum loan amount of Rs6 billion for individual projects up to 50 megawatts.

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