Atiur Rahman
Governor, Bangladesh Bank :
As the country progresses towards development, the demand for energy by all sectors of the economy, including industries, also increases. For sustaining the present trend of GDP growth, the outputs of industries would require to grow at the same or more pace. For that to happen, energy security is a must and energy efficiency can play a pivotal role in this regard. Given its immense potentials, achieving energy efficiency is a high priority activity in developing economies like Bangladesh, supported by investments from both governments and businesses. I believe that fostering energy efficiency with required supports from the businesses and government will benefit us greatly by developing tools necessary for coping with the challenges posed by energy deficits. You all know that there is irreversibility of nature. The more we consume, the less will remain for further consumption. As such, efficient use of energy will be the key policy concerns in the coming days.
Apart from saving energy, energy efficiency will help reduce carbon foot-print of the industries and enhance environmental sustainability as well as quality of life for the broad masses. This will ultimately ensure green growth which is now-a-days on the top of the global agenda of discussions due to serious threats posed by global warming and associated climate change. Bangladesh Bank is encouraging scheduled banks and financial institutions for green financing and for developing green products. BB considers ‘green banking’ as a socially responsible mode of financing and deems it as one of the major drivers of sustainable economic development in Bangladesh. Green banking/financing requires thorough due diligence of environmental parameters under Environmental Risk Management for which a guideline has already been developed by BB. All banks and financial institutions, local and foreign, private and public, have been following the Environmental Risk Management Guideline.
Banks/FIs in Bangladesh have been advised to finance solar energy, bio-gas plant, ETP and Hybrid Hoffman Kiln (HHK) in brick making sector under refinance programs. Another dozen plus green products will soon be added to this list.
In order to further boost this mode of financing and encourage entrepreneurs, we have already introduced refinance line of Taka 2.0 billion at a rate of 5%. Bangladesh Bank has designed a program titled ‘Refinance scheme for Financing improving Brick Kiln Efficiency’ with the ADB for which a fund of US$ 50 million to refinance energy efficient brick kiln technologies, such as, HHK, Zig-Zag, VSBK and Tunnel, has been created. Banks/FIs can avail the fund at 5% interest rate. This low cost fund will pave the way for adoption of energy efficient and environment friendly technologies.
We are happy to see that ADB has come up with a technical assistance advance of US$ 1.5 million to IIDFC and appointed an International consultancy firm to conduct energy audits in 120 industries of six broad industrial sectors to identify possible scopes of energy savings. I hope these measures can be replicated in other industries of same category too. It is of course not possible to precisely predict the probability or timing of success of such program, but episodic evidences from other countries indicate a fair percentage of success, often with spectacular returns before long.
I think this is a promising new area of financing with the initial mobilization of US$ 30 million fund by ADB, to be channeled through financial institutions, for on-lending to the eligible industries willing to save energy by implementing the measures suggested by the consultants. This workshop is expected to unleash possible avenues for the industries seeking finance as well as technological solutions.
