First financial loan for biogas in Sri Lanka

• RDB Western Province says keen to granting more loans for renewable energy projects

The world is moving towards renewable and alternate sources of energy given the rising cost of energy caused by the depreciation of fossil fuels. However, for most residing in non-Annex 01 or developing nations, renewables are not always seen as an ‘alternative’ due to its colossal start-up costs. While most are well aware of the cost being a one-time payment when taking into consideration its long-term positive benefits and implications, complications start to arise when having to set aside a lump sum ensuring no disruption to the cash flow. 

It is due to the very reason that the EU funded SWITCH-Asia initiative on ‘Up-scaling Biogas Technology for Sustainable Development and Mitigating Climate Change in Sri Lanka’ has, as part of its project plan, begun working towards feasible loan schemes for those who wish to opt for bio-digester installation in their premises. 

Ruwan Kumara who runs a piggery in Kaduwela was such an individual who had wanted in his premises a bio-digester but did not have the required financial means to see through this. The first loan granted through the project was in conjunction with the Regional Development Bank (RDB) for a Sri Lak Umaga type 15m3sized bio-digester. Following the issuance of the first loan, the RDB has received three more loan requests from livestock farmers of Attanagalla. 

The loan amount of LKR 200,000 has been granted on an annual interest rate of 7.8% by RDB Homagama branch. RDB bank has taken a special interest in providing loans to biogas units citing it as a social need to promote renewable energy options among its clientele, which will help to preserve our environment.

“The Central Bank already has a loan scheme in place for waste management projects called ‘Saubhagya’ that gives out loans at the interest rate of 8%. As Regional Development Bank we are extremely pleased to have been a part of the first loan granted for a biogas project. We have more potential applicants lined up that our field officers are inquiring to verify for suitability. In future, we look forward to granting more loans for biogas and other renewable energy projects for smallholders, farmers and individuals,” said Regional Development Bank Western Province Manager AHMMB Jayasinghe.

The project’s primary target groups include the promotion of biogas technology to tourism and domestic sectors by means of providing a solution for waste management, encouraging sustainable consumption and production and in the long run, as an alternate source of energy, and further creating general awareness on the technology to the public. Apart from this, the project has been training small and medium entrepreneurs in the technology and equipping them with the required skill-set to design, construct and market biogas and also act as a connecting agent between biogas vendors and potential consumers. 

With the introduction of the loan scheme, the EU funded SWITCH-Asia initiative has been able to complete another intended milestone: making renewable technology an affordable choice for all.  

The EU SWITCH-Asia initiative is a joint partnership between People in Need, Cz and local partner Janathakshan funded by the European Union. The project is focused on up-scaling biogas technologies for sustainable development, responsible tourism, economic growth contributing to poverty reduction and climate change mitigation in Sri Lanka. The project targets tourism Small and Medium Enterprises, households and public authorities in the country while building the technical capacity of manufacture and construction SMEs in biogas technologies. 

The project also supports micro-finance institutions to develop financial schemes providing loans for biogas installations to SMEs and households. Furthermore, the training and capacity building component of the initiative assists local construction sector to enhance its technical and entrepreneurial competences regarding manufacturing and installation of biogas systems.  

For more information please contact [email protected].