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Scheme finalised for renewable energy projects

By Amin Ahmed

The government has finalised a scheme to provide financing for the establishment of power projects using renewable energy with a capacity of up to 10MW.

The project is aimed at promoting renewable energy in the country.

The Board of Investment (BOI) has designed the financing scheme under which financing will be provided by banks and development financial institutions on “first come first serve basis” within the overall amount earmarked for the purpose. The government will give preference to projects in less developed areas.

The new power plants of up to 10MW installed capacity using alternative and renewable energy sources like wind, biogas, bio-fuels, solar power and geothermal energy as fuel will be considered for funding under the scheme.

While adequate funds have been earmarked for the scheme, banks and DFIs would be required to approach the Small and Medium Enterprises (SME) Finance Department, State Bank of Pakistan after their internal approval of financing to each project for confirming the availability of funds, according to the scheme.

The investors of power projects can avail the financing facility for new imported and locally-manufactured plant, machinery and equipment. Under the scheme, refinancing would be provided up to 100 per cent of financing provided by banks or DFIs to eligible borrowers for the import and local purchase of plant, machinery and equipment.

The BOI policy stated that sponsors of power projects will be required to meet the requirements of Alternative Energy Development Board (AEDB) being the concerned government regulatory authority and other departments in compliance with the prevalent renewable energy policy of the government.

Under the scheme, financing under the scheme will be available for a maximum period of 10 years, including a maximum grace period of two years. The grace period will be over and above the `availability period` of one year. However, maximum period of financing will not exceed the period of 10 years, including grace and availability period from the date of first disbursement.

Meanwhile, the government has requested the Asian Development Bank to provide a multi-tranche financing facility (MFF) to facilitate investments in renewable energy. The renewable energy investment programme is part of the government`s long-term energy security strategy. The government`s investment programme will cover various renewable energy development activities in all parts of the country which include hydropower projects, wind power projects, solar power projects, and biomass projects.

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