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13 January 2021

SHS: IDCOL\'s partners livid over \'unfair loan-waiver policy\'

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Business Desk :
Some of the largest partner organisations (POs) involved in the government\'s solar home system (SHS) programme in off-grid areas, have decried what they describe as \"an unfair policy\" for waiving loans on the part of state-owned Infrastructure Development Company Limited, reports UNB.
According to industry sources, IDCOL recently initiated a loan waiver programme for its POs, in view of the financial losses incurred by them after grid electricity under the Rural Electrification Board reached the areas in which they had installed solar home systems earlier than had been anticipated.
The rapid expansion of grid electricity, coupled with a change in policy of the government with regard to rural electrification served to destroy the business model for the POs.
The IDCOL board on November 28 approved a policy on loan waiver facility that was a huge let-down for a segment of the industry: namely, the larger POs as the policy that was announced stated the largest POs will not be eligible for any loan waiver before evaluation of their next year\'s performance.
\"Due to this policy, the largest players in the SHS programme who installed 65 percent of the total number of SHS, become victimised as they will simply not receive the waiver facility,\" said an official of a PO preferring anonymity.
He alleged that the small POs, which altogether installed 35 percent of the SHS programme, have been given the highest priority, some even getting to enjoy a full and unconditional waiver of their loans.
IDCOL deputy managing director Monirul Islam admitted the limited loan waiver facility, but tried to console by saying it is still a proposa, with a number of suggestions to address the issue. It needs final approval of the government and also from Bangladesh Bank as the regulator.
Monirul, however, vehemently denied that the waiver is discriminatory, or meant to deprive the largest contributor from getting its due benefit.
\"This is just an approach to resolve the issue. We think this will be implemented in phases, and the largest players will start availing benefits in the second or third phase,\" he added.
The IDCOL Board resolution shows that Srizony, Rural Services Foundation (RSF) and Grameen Shakti, some of the largest POs, will not get to avail the loan waiver facility (at least at first) although their performance was highest and contribution was largest in compared with others.
Solar industry insiders said the SHS programme was launched by IDCOL in 2003, and in the last 17 years about 5.5 million solar home systems were installed across the country.
The POs implemented the programme with financial support from IDCOL, while the state-owned financing agency received the fund from different donor agencies as a development fund.
In installing the solar system for customers, there was a tripartite partnership to the financial model under which IDCOL provided about 70 percent of the total cost of installing the system as soft loans to the POs, while the remaining 30 percent was invested by the POs and the customers themselves.
After installation of the solar system, the customer would pay back the entire cost to the POs in three to five years, while POs would pay back the loan they took from IDCOL.
Officials said under this arrangement about Tk 4500 crore was provided by IDCOL to the POs and the programme was running very well illuminating the country\'s off-grid areas.
It all started going wrong once the government decided it could not keep its commitment in exchange for implementing the SHS programme, which was that no electricity utility would intrude in those areas which used to be off the grid with grid electricity.
At one stage, Bangladesh\'s SHS programme was acclaimed as the world\'s largest single programme for providing electricity to off-grid households. Its success played a big role in improving their socioeconomic conditions, said an official of a PO.