S M Formanul Islam has been working with the expansion of renewable energy and energy efficiency over the past few years.
He is now working as Executive Director and Chief Executive Officer of Bangladesh Infrastructure Finance Fund Limited (BIFFL), the non-banking financial institution of Bangladesh.
Earlier, he served as Deputy CEO of Infrastructure Development Company Limited (IDCOL), another non-banking financial institution of the government.
Since its inception in 2011, BIFFL has been implementing several projects on renewable energy and energy efficiency.
Formanul Islam is telling every details of the advancement of the new company in an exclusive interview with energynewsbd.com Editor Aminur Rahman.
energynewsbd.com: Please give a description of your organisation’s activities, particularly contribution in the renewable energy sector in brief.
S M Formanul Islam: Bangladesh Infrastructure Finance Fund Limited (BIFFL) is a government-owned non-banking financial institution, operating since 2011.
It has a mandate to invest in large infrastructure and sustainable development projects. It has a paid-up capital of Tk 2,200 crore, which makes it the largest financial institution in Bangladesh. Renewable energy and energy efficiency and conservation is one of our preferred sectors.
In addition to financing large infrastructure projects, we also finance environment-friendly green projects. We encourage our borrowers to adopt the green approach.
BIFFL has a dedicated wing for investment in renewable energy and energy conservation projects. 10% of our total fund is allocated for renewable energy and energy efficiency and conservation sector.
We are considering 39 projects in this sector and have already approved 10. The projects are of various types, such as- auto bricks (tunnel kiln technology), green building, recycling plant, solar-based power plant, energy efficient machineries and equipment, etc.
It is important to mention that, this sector is still developing and needs a lot of support. So, if we find a potential project, we extend advisory services to the sponsor so that they can overcome the obstacles in order to make the project viable.
We are also actively looking for low cost fund for projects in renewable energy sector. We channeled fund from Asian Development Bank (ADB) for auto brick projects, from Sustainable Finance Department of Bangladesh Bank for renewable energy projects and Japan International Cooperation Agency (JICA) fund for energy efficiency and conservation projects. Currently, we are working with the World Bank to avail IPFF-II fund for this sector.
energynewsbd.com: What are the main renewable energy and energy efficiency and conservation activities BIFFL were and are working with since its inception?
Formanul Islam: We want to lay the groundwork for financial institutions to have an interest in sectors that have huge scope of being environment-friendly. Brick manufacturing is such a sector in our country.
We want to encourage entrepreneurs to adopt the eco-friendly technologies in brick manufacturing. Hence, to raise awareness about this issue, BIFFL organised ‘BIFFL Green Brick Convention 2016’ on November 11, 2016. We are planning to organise such programs in the future too.
Additionally, BIFFL officials, including myself, have attended a number of workshops, seminars and training sessions to increase our own capacity. As a part of promoting sustainable finance and green energy in Bangladesh, BIFFL participated in Bangladesh International Green Summit, International Conference on Development in Renewable Energy and Technologies, Bangladesh International Innovation and Development (BIID) Expo 2016 and many more. This year we are contributing as the trade partner of BIID Expo 2017.
energynewsbd.com: How many grid-tied solar power plants have BIFFL financed?
Formanul Islam: BIFFL is yet to approve any financing facility to grid-tied solar power plants, but we are considering four such projects for financing at this moment.
energynewsbd.com: Uninterrupted power supply is considered as one of the biggest challenges for a developing economy like us. On that note, how can solar power contribute to ensure that?
Formanul Islam: Needless to say, to continue our development trajectory and attract investment from home and abroad, we need uninterrupted power supply.
In 2015, Bangladesh’s power generating capacity was 11,532 MW. However, government of Bangladesh has targeted 24,000 MW capacity by 2021.
To achieve this goal, the government is encouraging private sector to come forward and collaborate with the public sector. The government has targeted to add 2,000 MW to the national grid from solar power plants. This target would be unattainable without the participation from private sector.
Being a tropical country, Bangladesh enjoys sunlight in abundance for at least nine months of the year. As a result, solar power has tremendous potential in our country.
So, we need to build awareness about this potential and the financing facilities that we can extend to them for such projects, and at the same time, the government needs to offer suitable tariff rate so that the power plant projects can be sustainable.
energynewsbd.com: What are other sectors that BIFFL is now working with aside from renewable energy and energy efficiency and conservation?
Formanul Islam: We have the mandate to finance any project related to infrastructure. It includes a wide range of different sectors including power and energy (generation and transmission of power, biomass or biogas energy in environment-friendly way) and natural resource development (exploration, production, transmission and distribution of oil, gas and other mineral resources, oil refinery and production of LPG).
It also includes a gamut of connectivity proejcts (roads and highways and expressways including mass rapid transport system, economic zone, etc., air and railway transportation projects, in-land water ways, dredging etc.) and port development (deep sea port development, sea, river and land port, including inland container terminals, inland container depot and other related services).
We also have the capacity to finance projetcs involving the telecommunication system (cellular, broadband, satellite, cable and data transmission, networks and services), hotel and tourism (basic and all necessary infrastructure related to tourism industry), utility and environmental management (water supply and distribution, sewerage and drainage, effluent treatment plants, land reclamation, dredging of rivers, canals, wetlands and other related facilities) and production of chemical and organic fertiliser.
Our financing is also available for any social and industrial infrastructure projects (industrial estates and parks, health, hospitals, education, human resource development, research and development and cultural facilities, etc.), poverty alleviation projects (rural utility, technology and connectivity development projects) and urban development projects (urban, municipal and rural projects to support economic development activities).
energynewsbd.com: As a financial institution, which ones are BIFFL’s preference sector for loan disbursement? Can you please provide some information about sector-wise loan disbursement?
Formanul Islam: We have already disbursed about Tk 1,200 crore and our major sectors were power and energy, connectivity (elevated expressway and economic zone) and renewable energy and energy efficiency and conservation.
energynewsbd.com: What sort of traits BIFFL usually considers while disbursing a loan in renewable energy and energy efficiency and conservation sector?
Formanul Islam: We worked with ADB and Bangladesh Bank’s Sustainable Finance Unit while assessing renewable energy projects. So, our requirements are in line with the international practices.
We are currently channeling fund from JICA for energy efficiency and conservation projects, where Sustainable and Renewable Energy Development Authority (SREDA) is the administrative authority.
The primary requirement for any project is to obtain proper licenses and approvals from respective authorities. After that we conduct our own due diligence of the project and only upon satisfactory findings the loan is approved.
energynewsbd.com: In your opinion, what are the main obstacles and challenges of renewable energy and energy efficiency and conservation sector now?
Formanul Islam: The main obstacles and challenges of renewable energy and energy efficiency and conservation sector now is the lack of awareness among people.
If we talk about the brick manufacturing sector, traditional brick fields (fixed chimney kilns) have become illegal as of July 1, 2016.
However, many of the manufacturers are still unaware about the alternative eco-friendly technology to FCKs. And those who are aware, are not inclined to adopt the alternative approach due to the high project cost and unavailability of financing facilities, in addition to the cumbersome process of getting approvals and licenses.
So, I would recommend that we conduct awareness building activities as well as the industry’s technical capacity. I would also request our government to look into the process of getting licenses without much hassle.
For the solar power plants, if the tariff rate is not high enough the projects are not feasible at the current cost of fund and so, the private sector entrepreneurs are losing interest.
The amount of land required is an issue for solar-based power plant, but it certainly is not the main concern. To attract the private sector, lucrative tariff rate has to be offered so that the projects remain financially viable.