Rs36 billion loaned under financing scheme for renewable energy

Karachi: Total loans under the SBP’s financing scheme for renewable energy amounted to Rs36 billion as of February as the scheme has evolved over time and received strong response, the central bank governor said on Tuesday.

As of February 2021, financing of around Rs36 billion have been extended for 521 projects producing approximately 850 megawatts, the State Bank of Pakistan (SBP) Governor Reza Baqir said addressing a webinar.

In June 2016, SBP issued financing scheme for renewable energy to promote renewable energy projects and doubled scope of concessional financing last year.

“Mobilisation of financial resources towards resource efficient and sustainable avenues would play a central role in mitigating climate change,” Baqir said. The scheme can be beneficial for the stakeholders ranging from the corporates to the individuals. He urged participants to benefit from this facility.

SBP Governor said financing for sustainable development is the need of the hour and financial institutions have a crucial role in this area.

“Pakistan faces challenge as a result of climate change and adopting prevention strategies are of paramount importance,” he said. “Pakistan is member of Global Sustainable Banking Network since 2015 and green/ sustainable finance policies are being aligned with global environmental and social standards and best practice.”

The webinar was jointly hosted by SBP and Unilever Pakistan that is using the scheme to convert 30 percent of its factories to renewable energy.

Unilever Pakistan Chairman and CEO Amir Paracha said 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. 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.”

Paracha said the 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.

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. 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 net metering regulations.

Unilever availed a loan of Rs833 million to set up 8.85MW of renewable energy production facilities across four factories in Punjab.

The renewable energy solution was implemented by Reon Energy Limited, producing 13 million kilowatt units of energy per year, resulting in annual savings of Rs182 million and a reduction in 5,075 tons of CO2 emissions.