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A roundtable on "Energy Sustainability: Role of Banks and Financial Institutions" held Sunday put thrust on diversifying the energy basket by minimising dependence on fossil fuels and increasing alternative green resources, i.e. renewable energy resources. However, renewable energy projects (i.e. solar power plants, wind power generators) and projects for raising energy efficiency require high investment costs.
Bangladesh Institute of Bank Management (BIBM) and GreenTech Foundation Bangladesh in cooperation with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH jointly arranged the event, said a statement.
State Minister, Ministry of Finance and Planning Mr. M A Mannan, MP was present as the chief guest.
Deputy Governor of Bangladesh Bank Mr. Ahmed Jamal, Secretary (In-charge), Economic Relations Division, Ms. Mahmuda Begum, Additional Secretary of Power Division, Mr. Md Mahabub Ul Alam, Director General of BIBM, Dr. Toufic Ahmed Chowdhury, Head of Development Cooperation, Embassy of the Federal Republic of Germany, Mr. Mr. Andreas Hartmann and Vice-Chairman of GreenTech Foundation Bangladesh, Prof. Dr. AKM Saiful Majid was present as Special Guests.
Representatives of other development partner agencies such as the World Bank, IFC, KfW, UNDP and ADB were also be present as discussant. Mr. Md. Helal Uddin, Chairman has presided over the program while Mr. Siddique Zobair, Additional Secretary & Member SREDA has moderated the program.
The participants opined government should provide incentives on green energy schemes in order to achieve the goal of producing 10 per cent of total power through renewable sources by 2021.
At present, 200 megawatts of electricity is 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 9.0 per cent interest under Bangladesh Bank's refinance 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 Tk 2.0 billion 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 percent interest, which then provide loans for renewable schemes at 9.0 per cent interest. Discussants went on to urge the central bank to reduce the interest rate, as the money allocated for green projects is not being gainfully used.
Some discussants said bankers do not always give loans for green projects despite the demand for finance. Banks are often reluctant to lend to renewable energy projects because from their point of view, these projects are risky. To inform about the long-term benefits and positive impact of the investment in the renewable energy sector, the statement added.
"A mere policy on green banking will not be enough. There should be clear instruction to bankers to grant loans for green schemes," said some discussants.
Bangladesh's dependence on import of fuel to produce electricity is rising. "It is dangerous from the energy security point of view," they said, adding that more emphasis should be given to explore domestic sources of energy.
The discussion highlighted the effects of financing green energy projects and explore solutions for maintaining energy security for sustainable development.
It was also highlighted the financial barriers in the development of renewable and green energy projects, role of public- private partnerships in raising private sector investment in modern green energy projects such as solar and wind, policy instruments needed to secure private capital for modern green energy projects, governments' role in fiscal policy in securing private investment in green energy projects, how to finance and promote investments in the green energy market to raise energy efficiency in housing, manufacturing, and transport, among others and mapping the role of new sources in financing and investing in green energy projects.