USAID, banks partner for $88mln energy sector’s financing

KARACHI: The United States Agency for International Development (USAID) on Friday partnered with five banks to lend an estimated $88 million for the development of clean energy sector in Pakistan.

The US Consul General Karachi Grace Shelton presided over the signing of a partnership agreement between the USAID and Habib Bank Limited, MCB Bank Limited, Faysal Bank Limited, Meezan Bank Limited and JS Bank Limited.

Under the 15-year partnership, the U.S. government agency agreed to settle half of the total bad loans.  Approximately, $88 million in financing will be available to support the development of the clean energy sector. 

Partner banks will be able to provide debt financing to small-scale clean energy projects undertaken by developers, companies or households. The loan is for purchasing energy equipment. 

 "The U.S. Government is excited to partner with some of Pakistan's leading private commercial banks and support the banks' efforts in promoting clean energy," said William Hammink, USAID Assistant to the Administrator for Afghanistan-Pakistan Affairs. "Under the program, small scale clean energy projects will be able to access long-term, Pakistani rupee financing.”

Hammink said the facility is expected to significantly improve access to financing for the smaller scale projects and encourage private investment in clean energy. 

Syed Samar Hasnain, executive director Development Finance Group of State Bank of Pakistan congratulated the USAID and banks. He also gave a brief history of some projects initiated by the SBP for funding green energy projects with a mark-up of as low as 6.0 percent.

Hasnain said the country possesses a huge potential of generating 3,200 giga watts of energy through wind, solar, bagasse (sugarcane waste) and other forms of green energy.

Under the US-Pakistan Clean Energy Partnership, announced by President Barack Obama and Prime Minister Nawaz Sharif in October 2015, US assistance supports increased energy generation, its transmission to Pakistan’s national grid, improved distribution, management, and revenue collection, as well as policy reform.

The primary focus of the US civilian-assistance program is to develop a stable, secure and tolerant Pakistan with a vibrant economy, according to the USAID’s website.

Working with other US agencies, as well as donors and international development partners, USAID has focused its program over the last year on five areas essential to Pakistan’s stability and long-term development and reflective of Pakistani priorities: energy, economic growth, stabilisation, education and health.

Over the last year, USAID has streamlined the number of projects from approximately 150 to less than 70 and has also chosen to implement over half of all funding through local organisations in Pakistan – both government and non-government.