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The government is providing Tk 1,500 crore in long-term interest to three institutions to expand renewable energy financing and reduce dependence on fossil fuels in power generation.
The three institutions are Infrastructure Development Company Ltd (IDCOL), Bangladesh Infrastructure Finance Fund Ltd (BIFFL) and Palli Karma-Sahayak Foundation (PKSF). Each will receive Tk 500 crore under the government’s financing programme, according to a circular issued by the Finance Division of the Ministry of Finance.
The institutions will on-lend the funds to eligible customers at an annual interest rate of up to 6 per cent, including all fees and charges.
The government itself will provide the loans to the three institutions at an annual interest rate of just 0.5 per cent.
The loans will have a 10-year maturity, including a one-year grace period.
Of the Tk 1,500 crore, Tk 1,000 crore will be reallocated from the lump-sum allocation reserved for the micro, small and medium enterprise (MSME) sector in the 2026-27 national budget.
The remaining Tk 500 crore will come from operating loans.
According to the government circular, the initiative is aimed at reducing the country’s dependence on imported fossil fuels, which has increased power generation costs, put pressure on government subsidies and created risks to national energy security.
The government has set a target of meeting at least 20 per cent of the country’s total electricity generation from renewable sources by 2030, in line with the National Renewable Energy Development Strategy 2025-2030.
The scheme will also support the expansion of rooftop solar power systems in industries, institutions and households.
Loans under the programme can be used for rooftop solar systems and net-metering connections, solar home systems, captive solar power systems for industries, solar-powered irrigation pumps, and related equipment such as inverters, digital meters and battery storage systems.
The funds cannot be used to repay existing loans, purchase shares or land, meet personal consumption expenses or cover administrative costs.
The participating institutions will bear the risk of defaults by borrowers.
They will also be required to maintain separate bank accounts, submit quarterly progress reports to the Finance Division and conduct annual independent external audits.