Imran Ahmad
Additional Director
Infrastructure, Housing & SME Finance Department
State Bank of Pakistan
Energy Crisis - Energy Demand & Supply Position
 Total primary energy supply for year 2012-13 was 64.72 MTOE
 More than 99% of use through conventional energy sources
 Heavy reliance on expensive sources of energy, as 80 % from petroleum
products
 12.7% from large hydro and nuclear power
 6.0% from coal
 Less than 1% through micro/mini renewable energy (RE) sources
 Pakistan's total energy savings potential: 418,807 TJ (11.16 MTOE)
 In FY 2011-12, this amounted to 17.25% of primary energy use!!!
 Insufficient Installed power generation capacity ~ 24,375 MW of which 67% is
thermal
 Electricity shortfall of around 5000 MW during peak hours
(Source: NEPRA’s State of Energy Report 2014)
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Electricity Shortfall –Costs to Society (Examples)
 Total primary energy supply for year 2012-13 was 64.72 MTOE
 More than 99 % of use through conventional energy sources
 Heavy reliance on expensive sources of energy, as 80 % from petroleum products
 12.7 % from large hydro and nuclear power
 6.0 % from coal
 Less than 1 % through micro/mini renewable energy (RE) sources
 Pakistan's total energy savings potential: 418,807 TJ (11.16 MTOE)
 In FY 2011-12, this amounted to 17.25% of primary energy use!!!
 Insufficient Installed power generation capacity ~ 24,375 MW of which 67%
is thermal
 Electricity shortfall of around 5000 MW during peak hours
(Source: NEPRA’s State of Energy Report 2014)
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Electricity Shortfall –Costs to Society (Examples)
 Citizens’ Quality of Life: wasted prime work hours, mental agony, sleep
deprivation, and other health issues
 Businesses: Idle capacity, reduced productivity, labor wages, expensive self-
power generation.
 Exports: Reduced Competiveness, Difficulty in meeting production/ delivery
targets.
 Agriculture: Reduced productivity
 Consumers: Inflation due to high production costs of consumable goods.
 GDP Growth: Electricity Shortfall costs 2% in GDP growth (Source Vision 2025).
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Renewable Energy Potential
Alternative Energy Source
Potential
Solar
2,900 GW
Wind
340 GW
Large Hydro
40 GW
Small Hydro
3.1 GW
Bagasse /Biomass
1.8 GW
Waste
500 MW
Huge Potential: Potential of
Low Exploitation: Only 7,116 MW
More than 3,200 GW.
of Hydro Potential is exploited.
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Renewable Energy Potential Investment Matrix
Sector \ Tech
Photovoltaic
SWH (Solar Water
Heater)

Cement
Leather

Paper
Sugar
Fertilizer
Others






Others
20%
Cement
13%
Fertilizer
4%

Textile Processing
Textile Spinning
Wind Energy
Total RE Industrial Investment (by
Sector)



Textile
Spinning
39%
Leather
5%
Paper
1%
Sugar
6%
Textile
Processing
12%
The industrial sector in Pakistan has long been suffering owing to unavailability of
energy (load shedding for gas and electricity):
 Part of this energy deficiency could be met by Renewable Energy (“RE”)
 Potential for private sector involvement: about USD 2.0 billion for 800 MW of
installed capacity
Source: IFC’s Market Study on Sustainable Energy Finance
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Investment Potential RE and EE Projects
 The investment potential in energy efficiency and renewable
energy is estimated to be 1.75 trillion PKR. The split by
sectors:
 Agriculture 46%
 Industrial 38%
 Residential and commercial 16%
 Demand and supply are not converging into substantial levels
of energy related financing portfolios for the banks/DFIs
 … a challenge for banks/ DFIs
Source: IFC’s Market Study on Sustainable Energy Finance
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Alternative Energy Financing – Challenges for Banks
 Engineers are not in underwriting teams: Technical skills required to evaluate
energy related financing application
 Technology Apprehensions: Efficiency and reliability of alternate energy
technologies is not demonstrated
 Vendor Issues: Unavailability of performance guarantees and/or after-sale service
from vendors
 Energy Equipment Supply Market: Small sales market and underdeveloped
secondary market for energy equipment
 Support Networks: Underdeveloped support networks
 Legal Court Issues: Slow arbitration of banking disputes
 Security/Collateral issues: SMEs lack collaterals and Small energy equipment can
be moved.
Source: Market Interactions
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SBP Initiatives…..
 Promotion of Green Banking - Focus on low carbon emissions and
resource efficiency
 Future Plans
– Green Banking Guidelines
– Leading by Example – Greening SBP premises
 Joining IFC’s Sustainable banking Network
 Facilitation to IFC for ESRM Baseline Survey
 Measures for Environmental and Social Risk Management
 Future Plans
– Guidelines for ESRM
 Trainings / Awareness sessions for banks/ DFIs
 Plans for next year - 4 Awareness Sessions and
- 2 Trainings on Credit Evaluation and Risk assessments
 Refinancing Scheme for Financing Power Plants (Continues….).
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Scheme for Financing Power Plants
 Facility
was introduced in December 01,
2009.
 Objectives:
 Meeting growing electricity demand through
renewable energy projects in the country
 To resolve liquidity issue for Financing Renewable
Energy Projects
 Affordability of Cost of Borrowing
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Scheme for Financing Power Plants…………………Cont’d
 Eligibility:
 New Projects upto a maximum capacity of 20MW.
 Subject to Fulfilling of Requirements of:
 AEDB
Government Regulatory authorities

New imported/local Machinery for establishment of power
plants using Renewable Energy .
(e.g. wind, hydel, biogas, solar power, geo thermal etc)
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Scheme for Financing Power Plants …………………Cont’d
…
Financing
 Maximum Financing Limit: Rs. 3 billion
 Validity: June 30, 2016.
 Period of Financing:
 Maximum tenor is 10 years
 Grace period of max. 2 years
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Scheme for Financing Power Plants………………….Cont’d
…
 Banks to evaluate request with in their lending policies
and terms and conditions of SBP Facility
 100% refinance by SBP for banks’ financing against:
 Purchase of new imported and locally
manufactured machinery and equipment.
 LCs established from December 1, 2009 to June 30,
2016.
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Scheme for Financing Power Plants
Tenor & Pricing:
Tenor
Up-to 5 years
Rate of
Refinance
Banks’/ DFIs’
Spread
5.0%
2.50%
Over 5 years and up-to 4.5%
10 years
3.00%
End Users’
Rate
7.50%
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Thank You