State Bank of Pakistan (SBP) has extended the renewable energy financing program using conventional and Islamic finance for two years, up to June 30, 2024.
In 2016, the banking regulator for the first time established this plan, which has subsequently been extended twice.
Concessionary funding is available for both big and small-scale renewable energy projects under this program. Under the net metering system established by the National Electric Power Regulatory Authority, the plan makes it easier to implement renewable energy solutions and projects (NEPRA).
It is possible to use alternative/renewable energy sources to generate electricity under this plan (i.e. solar, wind, hydro, biogas, biofuels, bagasse cogeneration, and geothermal as fuel).
Finance will be provided for renewable energy power projects ranging in size from more than 1 megawatt (MW) to 50 megawatts (MW) that are intended for consumption by the project sponsors and/or for sale of electricity to the national grid (including distribution firms).
The government of Pakistan’s Renewable Energy Policy mandates that all potential sponsors must meet all applicable requirements of the Alternative Energy Development Board (AEDB), the National Electric Power Regulatory Authority (NEPRA), and other relevant government departments/authorities (Federal or Provincial).
Up to 100% of the entire financing (debt) of an eligible RE project up to 20 MW and up to 50% of the total financing (debt) of an eligible RE project beyond 20 MW may be refinanced under this plan, provided that all other laws and regulations are followed. For a single renewable energy project, the maximum refinancing authorized under the plan is Rs. 6 billion.
Based on the two most important parameters, the maximum term of finance is 12 years with an extra two years of grace time, and the maximum amount of financing is Rs. 1 billion.