State Bank gives Rs36bn financing for renewable energy adoption

Published May 5, 2021
In this 2019 file photo, Reza Baqir, Governor of the State Bank of Pakistan (SBP), takes a question from a reporter (not pictured) during a news conference at the head office in Karachi. — Reuters/File
In this 2019 file photo, Reza Baqir, Governor of the State Bank of Pakistan (SBP), takes a question from a reporter (not pictured) during a news conference at the head office in Karachi. — Reuters/File

KARACHI: The State Bank of Pakistan (SBP) has been providing financing on a large scale to promote renewable energy that helped Unilever Pakistan run its 30 per cent plants on renewable energy, central bank governor Dr Reza Baqir said on Tuesday.

Addressing a joint webinar hosted by the SBP and Unilever Pakistan to create awareness about the former’s Financing Scheme for Renewable Energy (FSRE), Dr Baqir said that as of February 2021, financing of around Rs36 billion has been extended for 521 projects producing approximately 850MW.

Financing for sustainable development is the need of the hour and financial institutions have a crucial role in this area, he added.

FSRE aims to encourage investments for clean energy in Pakistan, the SBP governor said, adding that 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, he said.

This includes captive energy units as well as commercial projects and individual consumers who may share excess production with the national grid.

The SBP issued its FSRE in 2016 and based on positive feedback the scheme was revised in July 2019. The SBP also introduced a Sharia-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 (SDGs).

It promotes the use of indigenous resources such as wind, solar and hydro power to generate electricity as well as encourages the use of renewable energy at consumer level.

Dr Baqir said that Pakistan faces challenge as a result of climate change and adopting prevention strategies are of paramount importance. In this regard the SBP has issued FSRE with a view to promoting renewable energy projects.

He highlighted the key features of the scheme that can be beneficial for the stakeholders ranging from the corporate to the individuals. The scheme has evolved over time and received strong response, said Dr Baqir urging participants to benefit from this facility.

He said that mobilisation of financial resources towards resource efficient and sustainable avenues would play a central role in mitigating climate change. Pakistan is member of Global Sustainable Banking Network (SBN) since 2015 and green and sustainable finance policies are being aligned with global environmental and social standards and best practice.

In his address, Chairman & CEO Unilever Pakistan Amir Paracha said FSRE offered tremendous social and business value to companies and producers both in terms of their environmental footprint and cost savings ambitions.

As part of this financing scheme, Unilever availed a loan of Rs833m through Standard Chartered Bank to set up 8.85MW of renewable energy production facilities across four factories in Punjab.

This effort is in line with Unilever’s global mission for carbon neutrality and sustainability in its manufacturing process. Unilever has committed to remove carbon emissions from operations by 2030, as well as net zero emissions from their products by 2039, which will be 11 years ahead of the 2050 Paris Agreement.

The webinar was attended by various chambers, media organisations, presidents and CEOs of banks, energy experts, representatives of Pakistan Business Council and senior officials from the SBP.

Published in Dawn, May 5th, 2021

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