Five largest partner organisations (POs) of state-owned IDCOL, who played a vital role in expanding the solar home system (SHS), are now seeking the government’s intervention to resolve the loan write-off issue.

Otherwise, they say, they will be deprived of the benefit and face huge losses.

Official sources said IDCOL recently forwarded a proposal to the Bangladesh Bank seeking a write-off approval of Tk 306.41 crore default loans for its 39 POs. Its 44 POs have about Tk 1,400 crore in default loans.

Also read: Is solar power the solution to Bangladesh's growing energy ...

They said these loans, provided by IDCOL, became default because of the government’s fast grid power expansion programme.

“Grid electricity expanded to the off-grid areas that discouraged SHS consumers to pay back the loans they received from POs. Such unpaid loans finally made the POs defaulters in paying back the IDCOL,” said a top official of a firm involved in the renewable energy programme. 

IDCOL had distributed the loan after receiving funds from different donor agencies, including the World Bank.   

Read Govt rooftops can generate 2,000 MW of solar power, say experts

According to World Bank’s latest data, an estimated $1,094.93 million was invested in the HSH project to provide electricity to about 20 million people — which means about $266 per household.

Of the investment, 63 percent came from the World Bank, 14 percent from the Asian Development Bank and 12 percent from the Japan International Cooperation Agency.

The entire fund was distributed by IDCOL as a soft loan which resulted in saving Bangladesh $1,852 million while providing clean energy since 2003, says a recent World Bank survey.

Also read: Rooftop solar power: 'Net metering can ensure cheaper ...

It said the project helped households gain $745 million, partner organisations $310 million and the IDCOL $379 million while the government's net benefit was $474 million, said the donor agency.

Solar industry insiders said the SHS programme was launched by IDCOL in 2003. In the last 18 years, over 5.5 million solar home systems were installed.

They said that there was a tripartite partnership to the financial model under which IDCOL provided about 70 percent of the total cost of installing the SHS as soft loans to the POs, while the remaining 30 percent was invested by the POs and the customers themselves.

Read Green energy's share of power generation lagging far behind conventional sources

After installation, the customer would pay back the entire cost to the POs in three to five years, while POs would pay back the loans they took from IDCOL.   

Under this arrangement, officials said, about Tk 4,500 crore was provided by IDCOL to the POs and the programme was running very well, illuminating the country’s off-grid areas.

“The project was successfully running as the repayment by the POs to IDCOL was excellent,” said a top official of a leading PO.

Read Green energy in Bangladesh: Govt moves to save solar mini-grids

But the SHS programme started facing serious setbacks in 2015 with the aggressive and advanced grid-electricity distribution programme, mainly driven by the Rural Elctrification Board (REB).

Officials said as soon as SHS customers receive grid-electricity from REB, most of them uninstalled their solar systems and stopped repaying their loans to the POs.

They said though the BREB had no plan to expand their coverage, local lawmakers would push them for extending the reach to off-grid areas falling under their electoral constituencies. This would often violate the REB commitment to not go into areas where SHS were installed under the IDCOL loan programme.

Read Experts for re-fixing solar power generation target to 30,000 MW by 2041

“The REB move ultimately put the SHS in great trouble,” said a top official of a PO, declining to be named.

An IDCOL official said the rural power utility's expansion had a large impact on the entire SHS programme, as many POs were forced to write off their debts from households that stopped using SHS.

In that situation, the IDCOL board on November 28 approved a policy that it would consider loan waiver for 39 POs keeping the large 5 POs’ loan waiver for the next phase consideration depending on their performances.

The financial institute also forwarded its proposal to the central bank for approval. 

Read Is solar power the solution to Bangladesh's growing energy needs?

“Due to the IDCOL 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.

Seeking the government’s top policymakers’ intervention to resolve the issue, he said it will be absolutely unfair to deprive the top players in the SHS programme.

Chairman of Sustainable and Renewable Energy Development Authority (Sreda) Mohammad Alauddin said the issue is yet to come to his office.

Read Energy experts emphasise renewable energy to meet electricity needs

“If it comes to Sreda, it’ll try to play its role in resolving the issue as it did over the issue of mini-grid operators,” he told UNB.

Bangladesh Bank’s senior official Julkarnaine, who was dealing with the issue, could not be reached for comments for this article.