Shahnaj Begum : Entrepreneurs engaged in renewable energy business have failed to tap Tk 400 crore fund of Bangladesh Bank (BB).
The money was dedicated for green business financing. This is an incremental fund like Export Development Fund.
The fund now stands at $1.5bn but it is not lucrative for entrepreneurs as BB’s monetary policy is a big challenge here, experts observed.
BB launched the project with an initial fund of over $200m to promote exports. Later it introduced renewable energy project fund with cheaper interest rate.
At the initial stage BB took 5 percent charges from the commercial bank. Commercial banks disbursed the money adding 4 to 5 percent interest to it, said Sustainable and Renewable Energy Development Authority Chairman Mohammad Allauddin said on Tuesday.
Commercial banks imposed 4 to 5 percent interest as ‘risk recovery’, ‘operational cost’ and ‘recovery’ interest. All together clients had to pay 9 to 10 percent interest against their loan package, he said.
The new monetary policy has slashed the interest rate. It was not from BB’s end but from commercial banks’ end, he said.
As per the new monetary policy BB’s interest rate will remain the same (5 percent) as before. If the BB reduces the rate from its end it will be helpful for entrepreneurs,” a senior official of Power Division told this correspondent.
The announcement of launching a ‘green fund’ came in response to recommendations given by experts and entrepreneurs at the ‘Access to Finance-Environmental Sustainability in the Textiles Sector’ in 2015.
International Finance Corporation, Asian Development Bank (ADB), IDCOL and some others institutions came forward to inject money here. Some entrepreneurs are using the Energy Efficiency Fund but the Renewable Energy Fun has remained almost unutilized.
“The Power Division has requested the BB to change its policy to help the commercial banks to slash down their interest rate but unfortunately they (BB) did not pay heed,” he said.
A senior BB official said the central bank was working with many development partners and some regulatory bodies in green financing.
Describing different measures already taken by the central bank, a senior official of Bangladesh Bank said, “So far we have identified 47 green products under the refinance scheme with the addition of three new products, including in the garment sector.
All financial institutions have also been directed to allocate at least 5 percent of their loan to green finance by 2016, he added.
“We have enough institutional mechanisms and financial resources and we are working with many factories to reduce carbon emission,” he said preferring anonymity.
The government along with other signatories to the 2015 Paris Agreement has recognized the risks and opportunities to the transition to a low-carbon growth path.
International Finance Corporation estimates the total climate-smart investment potential in Bangladesh to be approximately $172 billion between 2018 and 2030, mainly in green buildings, transportation infrastructure, urban water, agriculture, waste management, and renewable energy, to meet the NDC targets.
The government has two sets of directives for renewable energy investment. It has set renewable energy development targets for several technologies for each year from 2015 to 2021.
“But if the government doesn’t take proper initiative to take up solar or any renewable energy projects then the mission will be a nightmare,” Siddique Zobair, former member of Sreda said.
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