SBP’sRefinancingSchemeforRenewableEnergy(Revised)DrMuhammadSaleemAdditionalDirectorStateBankofPakistan
Pakistan’sEnergySupplyandDemand
§ Installedpowergenerationcapacity:22,928MW§ Heavyrelianceonnonrenewableresources.§ Lessthan2percentfromREsources
§ Verylowcomparedtoregionalandinternationallevel§ Expensiveandnotenvironmentfriendly§ Shortageofaround6000MW
§ According to the National Energy Conservation Center(ENERCON), annual energy savings of up to 25 percent arepossible in all sectors, which equates to approximately $3billion per year.
S.No.
Source EstimatedPotential(GW)
1. Wind 340
2. Solar 2,900
3. Hydro:
Large 50
Small 3.1
4. Bagasse Generation 1.8
5. Waste 0.5
Total ≈3,300GWSource:IFC
RenewableEnergyPotentialinPakistan
RateofelectrificationinPakistan
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
200220032004200520062007200820092010201120122013
Off-Grid69milOff-grid,Unserved
75milOn-grid,Underserv
ed
53milOn-
grid,Served
144milfacingEnergyCrisis
Source:PakistanOff-GridLightingConsumerPerceptionsStudy2015byLightingPakistan
RoleofCentralBankinPromotingClimateInvestment
EnablingRegulatoryFramework• GreenBankingGuidelines
MarketDevelopment• CreditGuaranteeFacility
PublicFinancingMechanism• Refinance/CreditLineforCleanEnergy
Awareness&CapacityBuilding• Workshops/Seminars/Conferences
FinancingSchemeforRenewableEnergy
• ObjectivesofSBPFacility
• Eligibility
• FeaturesoftheFacility
• GeneralProcedures
FinancingSchemeforRenewableEnergy
– FacilityhasbeenrevisitedinJune2016.
• Objectives:§ Meeting Growing Electricity Demand throughRenewable Energy in the country
§ PromoteGreenBankingandClimateInvestment§ To provide concessionary financing for renewableenergy projects
FinancingSchemeforRenewableEnergy–Categories
• The Revised Scheme comprises of two Categories (I & II)
• Category I: large renewable energy projects ranging from(1 MW to 50 MW). Maximum refinance allowed is Rs 6billionper project.
• Category II: small scale renewable energy solutions (04KW to 01 MW) to promote renewable energy uptakeamong domestic, commercial & industrial consumers – inlinewith NEPRA’s netmetering regulation.
FinancingSchemeforRenewableEnergy–Eligibility
• Eligibility:§ Projects falling under category I and category II§ Subject to Fulfilling of Requirements of:
§ AEDB/ Provincial Energy Dept§NEPRA & Government Regulatory authorities
§Projects achieving financial close before June 2019§Refinance provided against 100% of bank lending toprojects subject to Rs 6 billion cap.
10
Mark-UpRates
FinancingSchemeforRenewableEnergy– Terms
Max.tenor Max.graceperiodCategoryI 12years 2yearsCategoryII 10years NIL
PeriodofFinancing
RateofRefinance Banks’/DFIs’Spread
EndUsers’Rate
2.0% 4.00% 6.00%
Repayments
• CategoryI:
– Principalrepayableinquarterlyorhalfyearlyinstallments
– Mark-uprepaymentonquarterlybasis
• CategoryII:
– Principal&Mark-uprepayableinmonthlyorquarterlyinstallments
• Bank/DFIshallbeentitledtochargemarketmark-upfordelayedperiodinrepaymentofprincipal
FinancingSchemeforRenewableEnergy–Features
• FinancingavailablethroughallCommercialBanksandDFIs• AvailabilityofFunding:
– Under Category I: The banks/ DFIs are required to confirm availability offunds after their internal approvals.
– SBPconfirmationoffundswillbevalidforaperiodofsixmonths.
• FinancingasperlendingpoliciesofFIstocovercreditrisk
• BankstoevaluaterequestwithintheirlendingpoliciesandtermsandconditionsofSBPFacilityinmaximumthreemonths
• FinancingbasedonFirstComeFirstServedBasis
FinancingSchemeforRenewableEnergy– OtherFeatures
• Secondhandmachineryshallnotbeeligible
• Banks/DFIsshallensurethatfirmcommitmentsof
fundsnotfinancedunderSBPschemeareavailable
• Banks/DFIsshallmakedirectdisbursementsto
manufacturers/suppliers/contractors
• RefinancetobeprovidedonthebasisInternalAudit
Certificateoffinancingbank/DFI
FinancingSchemeforRenewableEnergy– OtherFeatures
• ExpectedtoincreaseinvestmentinRenewableEnergysector
• Willreducepowershortfall
• PromotionofREatconsumerleveltosupportNEPRA’sNetMeteringRegulations
• Environmentfriendlyenergyprojectsreducingimpactonclimatechange
• Moreincentiveforlendingbanks(higherspread)andendusers(lowrate)
• Likelytoreduceelectricitytariffwhichwillincreasebusinessactivities
BenefitsofRevisedScheme
ImpactofSBPRefinanceSchemeTotalSize(MW) Technologies TotalCost(Million
Rs)RequiredAmount
ofRefinance(MillionRs)
AmountSanctioned(MillionRs)
618.1Solar,wind,biomass122,118.0 59,448.0 7,111.0
IdentifiedREInvestmentPotentialinMajorSectors
16
Sectortype Sub-SectorPotentialInvestment MainEquipmentforinvestment
RE(MPKR) RE
Industrial
Textile 133,500Solarwaterheaters(“SWH”),windpower,photovoltaics (“PV”)
Sugar 16,700 Biomass, PV
Leather 12,000 PV,SWH
Paper 1,400 Biomass, SWH
Cement 33,000 Windpower,concentratedsolarpower
Fertilizer 10,800 PV
Othersectors 52,000 Varioustechnologies
Non-industrialAgriculture 647,600
Directcombustion ofbiomass, biogas,solarwaterpumping
Residential 166,000Biomassfrommunicipalwasteandanimalmanure,SWH
TotalInvestmentPotential 1,073,000 Source:IFCStudyonSEFinPakistan
OperationalMechanismoftheRevisedScheme(Category-II)
1• BanksgetrequestfromclientsforfinancingundertheRevisedScheme• Bankscarryoutduediligenceprocessandapproveorrejectloan
2• BanksapproachSBPforsanctioningoflimitforapprovedloans• SBPreviewseachcaseandapproveslimitsforbanks
3• Banksdisbursefundsforsolarhomesolutionsetcasperterms• BanksapproachrespectiveSBP-BSCofficeforrefinanceagainstdisbursedamount
4• SBP-BSCofficestodebitbanksaccountasperrepaymentschedule