Green Climate investment (GCF) fund was granted US$256.5 million for Bangladesh to promote the private sector and give a major boost to finance from the approval of globally granted USD$ 1 billion of funding for developing countries in low-emission and climate-resilient development.
The announcement was made by the Infrastructure Development Authority Ltd (IDCOL), the Direct Access Entity (DAE) of the GCF on18 November.
It was noted that Bangladesh received this fund from the GCF for the first time of confessional credit line, as well as the first private sector of financing of GCF in the country. So far, it is also the largest approved funding proposal for any DAE of GCF, accredited globally.
Presently, the industrial sector in Bangladesh accounts for 47.8% of commercial energy consumption. Among this textile and RMG accounts for approximately 38% of the total energy consumption in the industrial sector.
“GCF has stepped up its operation this year despite global pandemic, and is providing more support to developing countries than ever as we help them to build a low emission and climate-resilient recovery.”
The objective of the approved program is to provide concessional loans from GCF to finance energy-saving technology and equipment for Bangladesh’s textile and RMG sectors to make it more affordable and accessible. Under the program, IDCOL will have a 250 million concessional loan for a tenor of 20 years with a grace period of five years for financing energy-efficient equipment.
GCF Executive Director Yannick Glemarec stated, “GCF has stepped up its operation this year despite global pandemic, and is providing more support to developing countries than ever as we help them to build a low emission and climate-resilient recovery. The ambitious work program the board has approved for 2021 will give further momentum to make our operations more efficient and more effective.”
Also, IDCOL will receive $6.5 million as a technical assistance grant.
Of the loan, $100 million will be utilized to finance the textile sector energy-efficient project, while $150 million will be distributed to four local financial institutions for financing energy efficiency projects in the RMG sector. The total program size will be $423.5million including co-financing from IDCOL, local financiers and project sponsors.
Dr. Rubana Huq, President of Bangladesh Garment Manufacturing and Exporters Association (BGMEA), said that she hoped the financing will mean adopting energy-efficient equipment will be much more affordable for garment factory owners and will further strengthen the competitive advantage of the Bangladeshi RMG sector.
“This program is a remarkable success for IDCOL in terms of accessing climate change fund to pave the path for our country to achieve its Sustainable Development Goals (SDGs), especially SDG 7 affordable, reliable, sustainable and modern technology for all; SDG 9 sustainable industrialization and SDG 13 combating climate change. It will also support the government, in achieving the NDC conditional target of 20% reduction of primary energy consumption per GDP by 2030 as per the Energy Efficiency Master Plan 2015,” IDCOL said.