The State Bank of Pakistan (SBP) has launched updated Islamic Financing Facility for Renewable Energy (IFRE) for power projects/installations using alternative/renewable energy sources including solar, wind, hydro, biogas, bio-fuels, baggasse cogeneration, and geothermal as fuel.
The previously introduced Modaraba-based “Islamic Financing Facility for Renewable Energy” will now be updated and replaced by IFRE. The IFRE will be effective immediately and financing will be available for projects achieving financial close under Category I and new sanctions under Category II or III up to June 30, 2022 only.
Under this Facility, the SBP acting as Rab-ul-Maal will make Modaraba investments in general pool of PIFIs. The exposure of SBP under the Scheme will be on all assets of the PIFI’s general pool to the extent of SBP’s investment, and therefore will not be limited to the assets financed under the facility.
The financing under IFRE will now available to the customers under three categories.
Under the category-I, prospective sponsors desirous of setting up renewable energy power projects with a capacity ranging from more than 1 MW and up to 50 MW for their own use, selling electricity to the national grid (including distribution companies) or combination of both will be applied. This will be available for a maximum period of twelve (12) years including a maximum grace period of two (2) years from the date of first disbursement.
Category-II is for prospective sponsors desirous of installing renewable energy source based projects/solutions for generation of electricity up-to 1 MW. The financing under category-II facility will be available for a maximum period of 10 years including maximum grace period of three (3) months.
Category-III will be for vendors and suppliers certified under AEDB Certification Regulation 2018 for installation of wind and solar systems on lease basis or selling of electricity to ultimate owners/users. Under this category, the disbursements to the vendor/ supplier for a single client (ultimate owner/user) will constitute a separate financing with its own repayment/redemption schedule not exceeding ten (10) years from the date of first disbursement to vendor/supplier for that particular client.
