Easy credit crucial to rural solar energy

Himalayan News Service

Kathmandu, February 7:

Solar energy plays a very vital role in poor, rural areas where over 70 per cent people do not possess electricity and other modes of energy are scare. For the growth of solar energy in rural areas, mobilisation of resources is crucial.

National consultants hired by Alternative Energy Promotion Centre (AEPC), under the ministry of science and technology, as per a study have found that solar energy financing possesses various risks from electricity generation performance to energy conversion technology.

They said that resource constraint is considered a major risk for energy projects, and when solid and liquid fuels are involved, the linkages including transportation often pose major risks. Other risks are operational risks, rural credit risk, peace and security risk. As per the study, out of 59,165 solar household systems (SHS) installed till March 2004 in the country, about 11,758 or 20 per cent has been financed by the formal financial sector. Eighty per cent of the systems have been brought directly by consumers. Most of these systems have been bought on cash payment and supplier credits. Financing by the informal sector also played an important role.

Easy and fast flow of financial resources to consumers is a perquisite to make projects more beneficial and successful, said experts at a consultative meeting held to finalise the study. Gopal Sharma, one of the consultants, said that Agricu lture Development Bank (ADB/N) is the key player in financing and the cumulative number of SHS financed by the bank till mid-March 2004 is 10,932.

“Even the central bank has decided to provide upto Rs 50,000 credit in rural areas for installing solar systems which was enforced recently,” informed Sharma. “Over 66 per cent of the population using solar energy are from high income groups while the poor income group people are nominal,” he said. It is sad to note that banks and other financial institutions charge 15 per cent interest rate in rural areas.

Tulsi Uprety, national consultant of the study said that Solar Household System (SHS) is specially designed for rural areas wherein we cannot expect electricity even after five years. The study has also shown that Rastriya Banijya Bank (RBB) has been active in SHS financing through its rural branches since 2002 that has financed 826 systems through its 20 branches. Other institutions such as micro-credit programmes, cooperatives and financial institutions also provide loans for SHS.