IDCOLS RE financing Scheme and Programs:

Apart from IDCOL’s most successful SHS program, this reputed Government financial institutions so far introduced many re-financing scheme and concerted programs to diversify the RE installations in areas like Biogas and Biomass based power and energy generation, Solar micro and mini-grid, solar irrigation and other types of commercials scale RE projects. The lending terms of all these different schemes are as follows.

a) Solar Home System (SHS) Program

Under IDCOL SHS Program, IDCOL does not provide any loan directly to the end users. All loans are being channelled through the Participating Organizations (POs) as per the following terms:

b) Domestic Biogas Program :

Under the Domestic Biogas Program, IDCOL does not provide any loan directly to the end users. All loans will be channelled through the Participating Organizations (POs) as per the following terms:

The lending terms for Domestic Biogas Programare as follows :

c) Solar Irrigation Projects :

The lending terms for the solar irrigation projects will be as follows :

d) Solar Mini / Micro Grid Projects :

The lending terms for the solar mini and micro grid projects will be as follows :

e) Biogas-based Power Projects

The lending terms for the biogas based power projects will be as follows :

f) Biomass-based Power Projects

The lending terms for the biomass based power projects will be as follows :

g) Other Renewable Energy Projects

The lending terms for other solar/wind/hydro/other renewable energy projects i.e. solar diesel hybrid solution for telecom BTSs, solar-powered transportation, rooftop solar system, solar cold storage and dryers, battery charging stations, community biogas projects etc. will be as follows

However, large grid-tied renewable energy IPP projects will be financed on commercial terms and may also be eligible for a USD loan.

Bangladesh Bank Re-financing Scheme

The central bank launched the BDT 2 bn green banking refinance scheme in August 2009 to set up solar panel, bio-gas plants and industrial ETP (effluent treatment plant) under the scheme – to help reduce industrial pollution and increase power supply. The fund has been named the “solar energy, biogas and effluent treatment plant sector refinance scheme”. The new more sectors have been brought under the green banking refinance scheme to build environment-friendly economy,” Under the scheme, Bangladesh Bank is providing loans to commercial banks at interest rates from 5% to 12% for direct refinancing and credit wholesale to the entrepreneurs, who will then have access to commercial bank loans in those sectors at a maximum interest rate of a further 5%. Overall interest rates will not exceed 12%, according to the fund’s conditions.

A maximum of 100% refinance facilities will be provided to the banks against their finance in setting up those plants in rural and urban areas and effluent treatment plants for industries. Under the revised scheme, the banks can sanction up to BDT 40m loans for setting up effluent treatment plants. The limit was formerly BDT 10m.The banks will be allowed to provide loans in rural areas worth up to BDT 175,000 to install home solar panels and BDT 150,000 for setting up solar mini grids.

For biogas power plants, loans from BDT 50,000 up to BDT 2.5m can be allocated for coordinated cattle farming under the scheme. For PET bottle reprocessing plants, LED bulb manufacturing plants and environment-friendly brick kilns, banks can provide credit up to Tk50m.

The scheme was undertaken in line with the government’s plan to meet 5% of the total demand for electricity from green energy by 2015 and 10% by 2020. So far Bangladesh Bank has included 26 new products under its revolving refinance scheme for solar energy, biogas and effluent treatment plants to give loans at low interest. The banks and FIs have already disbursed BDT 826bn as green financing during the period from January 2012 to June 2014.The central bank has brought 47 green products under its refinance scheme where 23 are green energy products.They have set annual target for banks and financial institutions for direct financing which will be mandatory from January 2015.

Here has a quick review on the refinancing process and on other related issues:

Area of the Scheme:

Location: The urban and rural areas of Bangladesh.

Focus & Specification: Main focus is on “Households and Business Enterprise” to set Solar Energy Panel, Solar Photovoltaic Plant, Bio-gas Plant and Effluent Treatment Plant etc.

Sectors: The scheme is allowed for three different sectors

   a)  Solar Energy
   b)  Bio-gas
   c)  Effluent Treatment Plant.

a) Solar Energy

If individual sets solar panel in his/her individual/joint apartments, business enterprise, cooperative societies or for familial purpose to generate electricity by taking the finance from banks in urban/rural areas, he/she will be able to get re-finance from this scheme.

The following sub-sectors will also be granted under this scheme:

• Solar Home System
• Solar Mini Grid
• Solar Irrigation Pumping System
• Solar Photovoltaic Assembly Plant

The Capacity of Solar System: It ranges from 10Wp to 50KWp.

Loan Range: Loan ranges from 10,000-6, 00, 00,000 taka.

The Eligible entities:

• Single/Joint Family,
• Business Enterprise,
• Cooperative Societies

       Interest Rate for Loan Holder:

• If Banks/Financial institutions provide loan directly to the consumers, interest rate will range from 8%-9%.
• If Banks/Financial institutions provide MFI linkage, interest rate will range from 11-12%.

       Loan Payment Period & Interest Calculation:

• Loan payment time ranges from 4 years to 10 years highest. Interest must be calculated in reducing balance method.

       Re-financial Loan Payment Period:

• Re-financial loan payment period ranges from 6 months lowest to 10 years highest.

       Debt-Equity Ratio:

• It will be based on the banker-consumer relationship.

b) Bio-Gas:

If loan is taken from banks to produce and use bio-gas in rural and urban areas, then the re-financial scheme will be applicable in this regard.

The following sub-sectors will be granted under this scheme:

• To Set Bio-gas Plant in Existing Cattle/Poultry Firm
• Combined Cattle Rearing & To Set Bio-gas Plant
• To Produce Organic Fertilizer from Slurry
• To Set Medium Bio-gas Plant

       Loan Range:

       Loan ranges from 25,000-25, 00,000 taka.

       The Eligible entities:

       Single/Joint Family/ Enterprise are eligible to get loan.

       Debt-Equity Ratio:

       It will be based on the banker-consumer relationship.

       Interest Rate for Loan Holder:

• If Banks/Financial institutions provide loan directly to the consumers, interest rate will be 9%.
• If Banks/Financial institutions provide MFI linkage, interest rate will be 11%.

       Loan Payment Period & Interest Calculation:

       Loan payment time ranges from 3 months lowest to 5 years highest. Interest must be calculated in reducing balance method.

       Re-financial Loan Payment Period:

       Re-financial loan payment period ranges from 6 months lowest to 5 years highest.