Dedicated central bank fund necessary to promote renewable energy: economists, energy experts

The Bangladesh Bank’s creation of a dedicated renewable energy fund is essential to promote green financing, say economists, magazines and energy experts.

Otherwise, it will not be possible to remove existing barriers to access to institutional finance, they said today (June 1) while addressing a seminar at the 2nd Renewable Energy and Finance Talk in Dhaka.

Research body Change Initiative organized the event at the Military Museum Multi-Purpose Hall in the city. The event was moderated by Tahmid Zami, Bangladesh correspondent and climate reporter at the Thomson Reuters Foundation.

M. Murshed Haider, World Bank consultant on infrastructure finance and PPPs, said one of the key problems in financing renewable energy projects is the lack of available funds for long-term financing.

“Bangladesh Bank has some refinancing programs for green products, but there is no special revolving fund for green energy promotion,” he said.

He also noted that security and higher return on investment are also key issues for financing, which must be supported by political support.

Admitting the lack of a dedicated renewable energy financing program, Chowdhury Liakat Ali, director of Bangladesh Bank’s Sustainable Finance Department, said the central bank is providing policy support to banks to encourage them to promote renewable energy.

He also admitted that there are certain criteria for access to central bank refinancing that private investors are unable to meet. As a result, banks are seeking BB guidelines on this matter.

Mohammad Alauddin, chancellor of the Bangladesh Energy Management Institute and former chairman of the Sustainable and Renewable Energy Development Authority (Sreda), said some funding was available from international agencies.

However, these funds take a long time to close financially as investors have to meet certain criteria to avail the financing, he said.

He also said that there is huge potential for rooftop solar energy in the country. However, so far no effective business model has been developed in which it can be applied.

Nayoka Martinez-Bäckström, First Secretary and Deputy Head of Development Cooperation, Embassy of Sweden in Dhaka; Rabbi Fazle Sideque Ahmed, Deputy Managing Director, Palli Karma-Sahayak Foundation (PKSF) and Sabbir Hossain, DMD and Chief Operating Officer, Sustainability Unit, BRAC Bank Limited also spoke on the occasion.

In another session of the seminar, former Sreda member Siddique Zobair said that subsidies in general are not good. However, this is essential when promoting renewable energy in the transition from fossil fuels.