State Bank issues updated Islamic financing facility

KARACHI: The State Bank of Pakistan on Wednesday issued an updated Islamic financing facility for the renewable energy projects, a circular said.

The financing under Islamic Financing Facility for Renewable Energy (IFRE) is now available to the customers under three categories. Under the first category, the prospective sponsors desirous of setting up renewable energy power projects with a capacity ranging from more than 1MW and up to 50MW for their own use, selling electricity to the national grid (including distribution companies) or combination of both will be eligible to avail the facility.

Prospective sponsors desirous of installing renewable energy source based projects/ solutions for generation of electricity up to 1MW will get the financing, the SBP said in a circular. Vendors and suppliers certified under AEDB Certification Regulation 2018 for installation of wind and solar systems on lease basis or selling of electricity to ultimate owners/users will also get the Shariah-complaint financing under the scheme.

The SBP will make Mudarabah investment in general pool of Participating Islamic Financial Institutions (PIFIs) under IFRE. Mudarabah investment of SBP in IFRE shall be available upto maximum financing limit of eligible projects as prescribed under each category of the Scheme.

IFRE shall be effective immediately and financing shall be available for projects achieving financial close under Category I and new sanctions under Category II or III after date of issuance of this circular and up-to June 30, 2022 only.

The Islamic banking institutions and development finance institutions having authorized Islamic financing operations under permission of SBP may submit their requests for the status of Participating Islamic Financial Institution (PIFI) keeping in view the criteria given in the facility.