Conditions in the energy sector are simply chaotic and not amenable to easy solutions. While almost every organ of the state - especially ministries of finance, and petroleum, water and power - is engaged in various kinds of plans to tackle this make or break issue for the economy, State Bank does not want to be seen as a bystander. In a circular issued to the banks/development finance institutions (DFIs) on 30th July, 2012, it enhanced the capacity limit of all renewable power projects from 10 MW to 20 MW for financing under the "Scheme for Financing Power Plants Using Renewable Energy." According to the SBP, banks/DFIs could now consider financing requests of the sponsors, who intend to set up power projects up to a maximum capacity of 20 MW, using all types of renewable energy sources eligible under the scheme. The maximum limit for financing to a single renewable power project was, however, fixed at Rs 3 billion to accommodate larger number of borrowers. It was provided, nonetheless, that banks/DFIs could continue to provide financing facilities as per their credit policies over and above the maximum limit from their own sources, subject to the Prudential Regulations. It was also clarified that the State Bank had taken this measure after the receipt of feedback from the Alternative Energy Development Board (AEDB). In a bid to overcome the challenge of energy shortages, the government of Pakistan has been giving due attention to fast track the development of Alternative/Renewable Energy (ARE) resources in the country in the recent past. In May, 2010, AEDB was given the mandate to implement ARE commercial projects on its own or through joint ventures or partnership with public or private sector entities. It goes to the credit of AEDB that it has initiated a number of measures including new wind corridors and National Grid Code for laying a strong foundation of the ARE sector in Pakistan. Along with the AEDB, the Pakistan Council of Renewable Energy Technologies (PCRET) has also been acquiring and updating know-how for the promotion of Renewable Energy Technologies by developing solar, micro-hydel, wind, biogas projects, etc. The main function of PCRET was to develop, acquire, adapt, promote, produce, and disseminate suitable technologies in the field of Renewable Energy. Fortunately, Asian Development Bank, International Finance Corporation, Organisation of Petroleum Exporting Countries and Economic Co-operation Organisation Trade Bank are also taking a lot of interest and seem to be prepared to offer financing, especially to wind power projects. Also encouraging is the fact that while most of the other initiatives in the country generally fail to yield the desired results, efforts of the government to generate energy through alternative and non-traditional technologies and by taking the private sector on board certainly hold a great deal of promise. Since the field is still risky and requires the infusion of new/venture capital on a substantial scale, the State Bank had to offer counter-financing to the financial institutions to induce them to provide such capital on reasonable interest rates to the budding entrepreneurs who could contribute handsomely to such an effort. Hopefully, with the enhancement of capacity limit of renewable power projects from 10 MW to 20 MW for counter-finance facility purposes, the banks/DFIs would now be more inclined to increase the loan limits in this particular field by a substantial margin. It needs to be added that the financial institutions, depending on the feasibility and other criteria of the projects, could also provide more advances from their own resources. Therefore, the limit to avail the counter-finance facility should not be construed as the maximum limit. With such a kind of liberal finance facility to the deserving entities in the field, the country's potential for the supply of renewable energy could be greatly improved and its economy could get a boost through the provision of clean and inexpensive sources of energy. Luckily, wind and solar which are regarded as essential ingredients for such an effort to materialise are found in abundance in Pakistan. However, while appreciating the efforts of the government and the contribution of the State Bank in expediting the process, there are certain factors which need to be kept in view when framing policies in the area of ARE. It may be pointed out, for instance, that development of ARE is relatively a new phenomenon and the country could at best meet only a tiny part of its total energy requirements from this source even with the best of its efforts. As such, the policymakers would still need to keep focus on traditional sources of energy for a long time to come. For this, problems like circular debt have to be solved at the earliest to increase energy supply in the short run and hydel dams have to be constructed and nuclear projects undertaken to meet the long-term energy requirements of the economy. It is hoped that all the institutions of the state including the SBP would continue to focus their attention to ensure that acute energy shortages are alleviated as soon as possible to avoid chaos on the streets and meltdown of the economy.
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