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‘Low interest loans needed to develop green energy capacity’

  • Published at 10:45 pm July 23rd, 2018
The government signed a deal with a Japanese-Bangldeshi joint venture company for solar energy Syed Zakir Hossain/Dhaka Tribune

The government should incentivize green energy schemes in order to achieve the goal of producing 10% of total power through renewable sources by 2021

Speakers at a discussion on Sunday urged the government and financial agencies to make a coordinated effort to promote green energy initiatives across the country.

“For an effective outcome, the policy making and support bodies, and donor agencies engaged in supporting renewable energy need to follow an integrated approach”, reads a keynote jointly presented at the roundtable by the Bangladesh Institute of Bank Management (BIBM).

Director (Training) Professor Dr Shah Md Ahsan Habib and Research Fellow on Sustainable Financing of International University of Malaya-Wales, Malaysia, Lutfor Rahman spoke at the occasion.

The Roundtable on “Green Financing for Energy Sustainability: Role of Banks and Financial Institutions” was organized by Sustainable and Renewable Energy Development Authority (Sreda), BIBM and GreenTech Foundation Bangladesh in cooperation with German agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), reports UNB.

The keynote speakers said there must be clear integration between Sreda and Bangladesh Bank in addressing different policy aspects of the renewable energy.

State Minister for Finance and Planning M A Mannan as the chief guest said that the government has a special focus on the promotion of the renewable energy.

He assured that the government will address the problems the green energy sector faces as part of its policy and development strategy.

The event was also addressed by Bangladesh Bank Deputy Governor Ahmed Jamal, Secretary (In-charge) of Economic Relations Division Mahmuda Begum, Additional Secretary of Power Division, Md Mahabub Ul Alam, Director General of BIBM, Dr Toufic Ahmed Chowdhury, Head of Development Cooperation, Embassy of the Federal Republic of Germany, Andreas Hartmann, and Vice-Chairman of GreenTech Foundation Bangladesh Dr AKM Saiful Majid.

Representatives of other development partner agencies such as the World Bank, IFC, KfW, UNDP and ADB were also present as discussants. Sreda Chairman Helal Uddin presided over the program while Siddique Zobair, additional secretary and member Sreda moderated it.

The speakers said that it is also important to diversify the energy basket by minimizing dependence on fossil fuels and increasing alternative green resources, like renewable energy resources.

They observed that renewable energy and energy efficiency projects require high investment costs.

The government should incentivize green energy schemes in order to achieve the goal of producing 10% of total power through renewable sources by 2021, said industry stakeholder.

At present, 200 megawatts of electricity are generated from renewable sources, meaning an additional 1,800 MW of power needs to be produced from green sources over the next five years to attain the goal.

The 9% interest under Bangladesh Bank’s refinancing scheme is relatively high when compared to the overall interest rate for commercial loans, said most of the discussants.

In 2009, Bangladesh Bank set up a Tk200 crore revolving fund for banks and financial institutions to give loans at low interest rate to solar energy, biogas, and effluent treatment ventures.

Under the scheme, the central bank provides funds to financial institutions at 5% interest, which then provide loans for renewable schemes at 9% interest.

Discussants urged the central bank to reduce the interest rate, as the money allocated for green projects is not being gainfully used.