1.    This is with reference to IH&SMEFD Circular No. 10 dated July 26, 2019 and IH&SMEFD Circular No. 12 dated August 21, 2019 wherein SBP has introduced the captioned refinancing schemes. Under Category III of these schemes, SBP has allowed financing to the vendors for installation of solar & wind energy based electricity generation projects/solutions for their clients, being the ultimate owners/ users of these projects/solutions. For the purpose of these scheme, a vendor/ supplier is the client of a financing bank/DFI who is certified under AEDB’s Certification Regulations.

2.    With a view to further promote and increase the use of renewable energy, on the basis of feedback received from relevant stakeholders, SBP has decided to enhance scope of Category III by also allowing financing to energy sale companies established specifically for the purpose of undertaking solar & wind based projects to sell electricity to ultimate owners/users. Such companies shall not be required to be certified under AEDB Certification Regulations. However, the financing banks/DFIs shall ensure that

1. The vendors/suppliers/EPC contractors of an energy sale company are certified under AEDB Certification Regulations.

2. Contracts/agreements of such energy sale company with vendors/suppliers as well as ultimate owners/users are made on arm's length basis in order to avoid any conflict of interest.

3. Disbursements by banks/DFIs are not made to the energy sale company directly; instead payments are made to the manufacturers/suppliers/contractors in line with underlying contracts and construction milestones.

3.    Further, following features have also been added/revised under Category III of the schemes:

1. Cumulative financing limit of a vendor/supplier/energy sale company has been enhanced from Rs. 1 billion to Rs. 2 billion.

2. Maximum capacity of a single renewable energy project/solution, that a vendor/supplier/energy sale company may install, has been enhanced from 1 MW to 5 MW. A vendor/supplier/energy sale company may install more than one renewable energy source based projects/ solutions of up-to 5 MW each for a single ultimate owner/user with condition that any two or more of such projects/ solutions for a single ultimate owner/user must not be located contiguously.

3. A vendor/supplier/energy sale company may avail maximum grace period of 06 months in the loan repayment schedule from the date of first disbursement for installation of a renewable energy source-based project/solution of up-to 5 MW each for an ultimate owner/user.  Banks/DFIs shall clearly mention the “grace period” in the repayment schedule to be submitted to the concerned office of SBP-BSC (Bank) at the time of availing refinance. Principal amount of loans shall be repayable in quarterly or half yearly installments after prescribed grace period, if any.

4.    Further, in addition to leasing of renewable energy equipment and selling of electricity, certified vendors/suppliers shall also be allowed to install wind and solar projects/ solutions on deferred payment sale or rental basis, with payment terms in the form of regular installments or regular rental payments from ultimate owners/ users. In order to avail refinance in such sale or rental transaction arrangement, the financing bank/ DFI shall be required to submit refinance request to the relevant SBP BSC office along with following documents:

1. Agreement of sale of renewable energy equipment or rental agreement between certified vendor/supplier and the ultimate owner/user along with schedule of payment of installments or rental payments.

2. Schedule for repayment of finance to SBP BSC.

3. Security deposit by ultimate owner/user equivalent to expected average three (3) months’ electricity bill in a remunerative account in the financing bank/DFI.

4. Undertaking of ultimate owner/user to route his payments of sale installments or rental payments through the bank/DFI.

5. Tripartite agreement creating lien of bank/DFI on the RE equipment installed.

6. Approvals of all relevant government departments / agencies, including issuance of license by NEPRA, approval / no objection of relevant distribution company etc.

5.     It is clarified that repayment schedule cannot go beyond the period of energy sale/lease/installments sale/rentals as per the agreement between a vendor/supplier/energy sale company and ultimate owner/user. In case of early completion/termination of agreement between vendor/supplier/energy sale company and ultimate owner/user, the vendor/supplier/energy sale company is required to settle full amount of financing it has availed in respect of that ultimate owner/user, within three working days.

6.    Other terms and conditions of these scheme shall remain unchanged.