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REB success leaves govt’s solar partners in the lurch

The government’s partners in the solar home system (SHS) program have been nursing deep frustrations over inaction on the part of the state-owned Infrastructure Development Company Ltd (IDCOL) to resolve their problems.

According to sources involved in the SHS program, around Tk 2000 crore invested by the partner organisations - who are mainly private firms and NGOs - remained stuck for several years against a backdrop of fast advancement of rural electrification across the country.

IDCOL and its POs have jointly been working for the last 15 years to bring electricity to remote off-grid areas of the country through SHS program, which already covered 4.2 million families in remote rural areas against a target of 6 million by 2021.

But in recent years, the SHS program experienced a drastic fall in its growth because of the fast-growing rural electrification program of state-owned Rural Electrification Board (REB), which is now providing about 300,000 connections a month to the rural areas. 

“Our monthly SHS installation now came down to 2000 a month from earlier 60,000,” said a leader of the association of partner organisations, the Partner Organisation Forum Trust (POFT).

He said many rural consumers who earlier installed SHS for electricity pulled out their systems as soon as REB provided them the conventional electricity.

Many consumers who installed SHS under an IDCOL-PO credit programme to repay the cost in 3 years just suspended the repayment of loan instalments, and as a result about Tk 2000 crorewas lost.

In financing the installation of a solar home system, the IDCOL finances up to 60-70 percent of the cost while the POs invest 30-40 percent.

Due to such problem, most of the POs became loan-defaulters being unable to repay their loans to IDCOL.

In such a deadlock situation, the POs were demanding loan rescheduling facilities with lowered interest rate for further financing of different renewable energy programmes.

IDCOL was also pursuing the policymakers to lower the interest on the credit it receives from the government. Finally, the Finance Division lowered the interest rate to zero percent from the earlier 3 percent.

The Finance Division in a letter dated May 29, 2019 to the Economic Relations Division (ERD) said that the rate of interest on the loan received by IDCOL under 9 programs for SHS has been re-fixed to zero percent from 3 percent with effect from July 1, 2018.

The POs were expecting that this letter will bring them some relief as the IDCOL would subsequently reduce the 6-9 percent interest rate it in turn charges in providing loans to the POs.

“But despite the Finance Division’s decision, no subsequent measures have followed from IDCOL to reduce interest on loan to POs. We are deeply frustrated by this,” a top leader of the Partner Organisation Forum Trust (POFT) told UNB.     

He said the POFT had written to IDCOL’s management on a number of occasions, asking for  measures to break the deadlock and overcome the crisis.

IDCOL’s chairman of the board as well as ERD secretary Monowar Ahmed admitted to UNB that the Finance Ministry had indeed initiated some measures recently for reducing the burden of interest on a loan.

“Definitely, IDCOL will take some measures soon and the POs will get some benefits” he told UNB.

As a board-chairman, he would also advise IDCOL management to take measures that encourage new avenues for renewable energy programs in the country, he added.

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