Bridge

Shams Power

Posted

December 2021

Sector

Power/Energy Supply

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GuarantCo and Bank Alfalah have provided Shams Power with a PKR 2 billion (c. USD 11.3 million) financing solution including a PKR 1.5 billion (USD 9 million) partial credit guarantee to support the construction of approximately 21 MW small rooftop and ground mounted solar plants across Pakistan to reach grid connected users.

Shams Power - Solar panels

Transaction benefits

GuarantCo and Bank Alfalah have provided Shams Power with a PKR 2 billion (c. USD 11.3 million) financing solution to support the construction of approximately 21 MW small rooftop and ground mounted solar plants at commercial, industrial and institutional (e.g. university, hospital) sites across Pakistan to reach grid connected users.

 

In addition to GuarantCo’s existing guarantee of PKR 1.5 billion (c. USD 9 million), covering 75 percent of the loan facilities, the company has committed an additional guarantee of PKR 1.5 billion to support Shams Power’s debt raising in 2022 to construct a further 21 MW of distributed solar plants.

 

Against GuarantCo’s guarantee facility, Bank Alfalah will provide the PKR 2 billion first phase of financing in the form of a 10-year term loan that benefits from the Renewable Energy Refinancing Scheme set up by the State Bank of Pakistan.

Development benefits

The project will improve Pakistan’s power sector efficiency by producing clean and green power near the point of usage, thus reducing wastage and line losses associated with the national grid and by stabilising the grid at peak times.  Shams Power helps to reduce carbon emissions and has a positive impact on mitigating climate change through the provision of clean, sustainable solar power.

 

This transaction has the potential to transform the rooftop solar market in Pakistan by demonstrating the ability for rooftop solar providers to access debt funding locally; this will allow for developers to scale up to unlock more solar potential. The transaction also builds the capacity of energy regulators and the State Bank of Pakistan (SBP), allowing them to create a supportive and practical regulatory and financial framework whilst also building the capacity of banks who are new to this asset class. Shams is also committed to continue the provision of training and potential employment opportunities to female engineers as the company grows.

 

Business and institutional users will benefit from lower electricity costs through the rooftop systems installed without incurring any upfront capital expenditure. The proposed solution also increases users’ electricity reliability and reduces their reliance on back-up diesel generators. Given climate considerations and business continuity reasons, Shams Power’s solution represents an efficient alternative to existing solutions. In addition, the transaction will lead to long-term job creation in the project value chain. It is expected that there will be over 60 local permanent jobs created by Shams Power.