B’desh Unveils $218.7Mn Green Transformation Fund to Offer Easy Financing for Solar Developers 

With an aim to make financing easily available post-coronavirus, Bangladesh has introduced a USD 218.7 million (EUR 200 million) Green Transformation Fund (GTF) so that soft loans can be provided to solar developers, other environment-friendly products and importers of Eurozone’s energy efficiency components.

Moreover, the fund issued is in addition to its existing USD 200 million funds to provide soft loans for dollar-denominated imports, as stated by the data and analytics company.

Commenting on the development, Somik Das, Senior Power Analyst of GlobalData, further explained “the decision to introduce a fund was taken to support the developers and importers better-access to finance with low interest. The sectors covered under this fund are renewable energy and energy efficiency, water conservation and management, waste management, resource efficiency and recycling.”

He added “access to low-interest loans will be a much-needed relief, especially post-COVID-19 as projects may be delayed due to liquidity and supply chain issues. Soft loans will be of great significance as renewable companies (developers and importers) get access to funds at lower interest rates, which may help them to sail through difficult times.”

The scheme covers 3 percent margins including 1 percent for the Central bank and 2 percent by the authorized lender. However, this margin, in the post-coronavirus market scenario, may not give complete relief to solar power developers as they are already facing a lot of adverse market conditions, said the report.

There may be issues like the higher cost of equipment on the back of supply chain issues, which may likely result in higher upfront costs as compared to earlier.

Significantly, the lower interest rates offered under the GTF scheme may not be able to offset the impact of increased equipment costs, as analyzed by the report.

“The Central Bank and authorized lenders may closely follow the after-effects of the pandemic and reduce their margins if needed, to be able to provide any further relief necessary to the industry borrowers. This will help in the rebound of not just the industry in particular but the economy as a whole,” the analyst commented.