Ministry of Finance’s SME – Business Support Fund (BSF) has initiated a $92 million BSF Smart Energy Programme to overcome energy shortage in small and medium industries. BSF has targeted to cut SMEs’ energy cost by 30 per cent and has completed preliminary energy audit of some 150 SMEs.
BSF Chief Executive Officer Syed Saquib Mohyuddin disclosed that a comprehensive PC-1 had been prepared – covering a total outlay of about Rs8.035 billion ($92 million), which would be submitted to the Planning Commission of Pakistan in next week. He was addressing a news conference here on Friday.
He said the programme was expected to conserve about 100 MW power demand and release of about 80MW power system capacities, valued at about $160 million. The programme had conceived mobilisation of about 30 per cent of resources from local investment banks and financing companies, while the rest would be generated through international donors. The programme would have two important components, including Rs2.175 billion ($25 million) Energy Endowment Fund and Rs2.175 billion ($25 million) Energy Investment Fund, he maintained.
Energy Endowment Fund will generate resources to cover the cost of free energy support services and operating expenses of the programme. It has estimated that free energy services will be offered to around 500 SMEs per annum. Similarly, Energy Investment Fund aims at providing capital investment to SMEs with part of the investment as grant. The funding for the Energy Investment fund shall be obtained preferably interest free with 50 per cent non-returnable grant from international donors.
He underscored that it had been targeted to provide 50 per cent of retrofit cost as grant to preferably export oriented SMEs. The retrofits would be offered with 10 year repayment plan of the remaining 50 per cent loan part of the programme.
Highlighting other salient features of the program, Mohyuddin said the programme would have a modern web-based outreach and communication module in addition to printed material that would help SMEs in adopting best energy usage practices.
He indicated that the programme was economically and financially viable with an estimated rate of return of about 71 per cent in payback period of about 1.4 years. In addition, the programme would encourage investment banks and leasing companies to enter in this untapped market, he underlined.
