Banks give loans not based on assets of persons: Energy Adviser

Adviser to the interim government on the Ministry of Power, Energy and Mineral Resources Muhammad Fouzul Kabir Khan has said during the previous Awami League regime, banks have financed many projects seeking the faces of the people, not based on the assets of the investors.

The Power and Energy Adviser said this while addressing a seminar titled ‘Rapid Transition to Renewable: Role of Domestic Financial Institution’, organised by Economic Reporters Forum (ERF) at its auditorium in the capital on Saturday.

He urged the businessmen to invest in the country’s different sectors including power and energy on the basis of business competition. 

Fouzul highlighted the interim government’s focus on promoting renewable energy (RE) and stressed that there is no alternative to such energy to get electricity as it has been a compulsion for the country’s export-oriented garment sector.

Held with ERF President Mohammad Refayet Ullah Mirdha in the chair, the seminar was also addressed by Centre for Policy Dialogue’s research director Dr Khondaker Golam Moazzem, the City Bank’s business country manager Ashanur Rahman and chief executive officer of CLEAN Hasan Mehedi.

Chairperson of Centre for Environment and Participatory Research (CEPR) Gouranga Nandy made a presentation on the topic of the seminar and ERF general secretary Abul Kashem conducted the event.

Kabir said it is not true that the scarcity of land has been the main bottleneck in promotion of the solar power projects, and noted that there are huge lands in different government departments that remain unutilised and empty. “Those thousands of acres of land can be utilised for the solar power plants.” The adviser added.

The adviser also opposed the idea of tax exemption for importing different components of solar power like inverter, panel and structures saying that these should not be imported from abroad. “Rather, these should be produced locally like those are in India,” he added.

He also opposed the demand for reconsidering the cancelled 37 solar power plants which were selected on the basis of Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 and issued letter of intent (LOI) by the previous regime. 

“There is no scope for reconsidering those projects as the High Court has already scrapped the Law.”
The adviser hinted that the government would not allow any more independent power producer (IPP) plants to be set up in the private sector as it  will have to set up power plants under merchant power plant policy (MPPP) from which the government will purchase a maximum 10-20 per cent power from the plant.
Currently, the government provides a guarantee to buy the total electricity of an IPP power plant, set up under a private power generation policy.

Dr Khondaker Golam Moazzem said that the local banks are not often interested in financing the renewable energy projects as those are long-term ones and banks collect deposits on a short-term basis. 
So, there is a risk in financing the long-term projects and the central bank takes initiative to cover the risk, he added.