GuarantCo and Bank Alfalah provide Shams Power with a PKR 1.5 billion (c. USD 5.2 million) finance solution to invest in small solar plants in Pakistan

GuarantCo and Bank Alfalah provide Shams Power with a PKR 1.5 billion (c. USD 5.2 million) finance solution to invest in small solar plants in Pakistan

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and Bank Alfalah have provided Shams Power with a PKR 1.5 billion (c. USD 5.2 million) finance solution to support the construction of 10 MW of small rooftop and ground mounted solar plants at commercial and industrial sites across Pakistan to reach grid connected businesses.

Shams Power is an established distributed solar developer with a total of 27 projects and an installed capacity of 25 MW across Pakistan. Eighteen projects with a capacity of 21.2 MW were completed and became operational under the first phase of the PKR 2 billion (c. USD 11.3 million) facility provided by GuarantCo and Bank Alfalah in December 2021.

The finance solution of PKR 1.5 billion (USD c.5.2 million) of senior debt provided by Bank Alfalah is 75 percent guaranteed by GuarantCo. The proceeds will support the construction of an additional c. 10 MW of solar projects across Pakistan. The second phase seeks to largely replicate the success of the first transaction working closely with the same transaction partners including Bank Alfalah and Capital Resource.

Shams Power helps reduce carbon emissions and has a positive impact on mitigating climate change, through the provision of clean, sustainable solar power. Both transactions will make a further contribution to the transformation of the rooftop solar market in Pakistan by demonstrating the ability for rooftop solar providers to access debt funding and scale up. This will allow the unlocking of more solar potential and help build the capacity of energy and financial regulators in this area. It will also create a supportive and practical regulatory and financial framework whilst building the capacity of banks that are new to this asset class.

The financing solution will support solar projects across Pakistan, which will reduce reliance on the grid, save an estimated 10.2k of CO2 emissions per year, and contribute towards progressing the Sustainable Development Goals (SDGs) in the country. The transaction will make a direct contribution to SDG 7: Substantially increase the share of renewable energy in the global energy mix and SDG 13: Climate mitigation.

Business users will benefit from a saving of 30-50 percent on their electricity costs through the solar systems. The proposed solution increases businesses’ electricity reliability in case of black-outs and reduces their reliance on back-up diesel generators.

In addition, GuarantCo, through a PIDG Technical Assistance grant, is co-financing Shams’ Solar EmpowHer programme which provides the necessary knowledge and skills for female engineers in the solar industry to empower them and promote gender diversity in the solar sector.

Layth Al-Falaki, CEO of GuarantCo, said: “We are very pleased to have closed our second transaction with Shams Power in partnership with Bank Alfalah.  Our first transaction two years ago, has proven that the financing model is scalable, replicable and the need for guarantee support will hopefully reduce over time as private sector involvement increases and local currency financing for this asset class becomes more prevalent. This transaction supports Pakistan’s commitments to decarbonise its power sector and is aligned with PIDG’s 2023-2030 strategy. Through our partnership with Shams, we continue to support Pakistan in its ambition to improve energy access and provide economical, clean and consistent energy supply to businesses as they transition towards renewable energy.”

Omar Malik, CEO of Shams Power, said: “This additional PKR 1.5 billion milestone with Bank Alfalah and GuarantCo’s backing isn’t just about powering businesses, it’s about powering Pakistan’s clean energy goals and increasing competitiveness of the C&I sector of Pakistan. Building on our past success, we’re deploying another 10 MW, delivering reliable renewable energy and a brighter future to businesses nationwide. We’re not just talking cost savings and sustainability wins for our clients, but sparking job creation, strengthening energy security, and empowering women in the solar sector through our Solar EmpowHer program. We would also like to specially thank PFAN for championing this phase of our transaction, and to GuarantCo and Bank Alfalah for their continued support. Together, we’re not just scaling solar, we’re shaping a greener, more equitable Pakistan, one watt at a time.”

Atif Bajwa, CEO of Bank Alfalah, said: “Bank Alfalah is pleased to complete our second transaction with Shams Power in partnership with GuarantCo. This agreement will significantly expand the share of cost-effective, environment-friendly and renewable source of energy in the country, paving a way for a greener way forward.”

Asif Elahi, Managing Partner of Capital Resource, said: “It has been a real privilege working with Shams Power on this challenging assignment. I am pleased to have been part of this journey and advising the company, over the years, in successfully scaling up its operations and meeting its clean energy financing targets to become the market leader in the C&I solar space in Pakistan. I would also like to take this opportunity to acknowledge and thank the Private Finance Advisory Network (PFAN) for promoting and supporting Shams Power for this particular transaction and of course our long-standing development partners, GuarantCo for their continued commitment to private sector credit growth in Pakistan.”

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About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 171 infrastructure projects to financial close which provided an estimated 217 million people with access to new or improved infrastructure. PIDG is funded by the governments of  the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC www.pidg.org

About Shams Power

Shams Power is Pakistan’s largest Commercial & Industrial (C&I) solar power developer, investing and setting up solar projects at C&I locations, saving on grid electricity costs from day 1 from clean solar energy at discounted rates. This model removes any CAPEX responsibility, Operations & Maintenance expense, and Equipment Risk for our Customers. The equipment is transferred to our customer at the end of the agreement, giving them free electricity for the remaining life of the equipment. Our clients include likes of Coca Cola, Mondelez, Metro Cash & Carry, Packages Group, Nishat Group, AkzoNobel Pakistan, Dandot Cement, Shifa International Hospital, and Maxim International amongst others.

About Bank Alfalah

Bank Alfalah is a leading commercial bank in Pakistan, boasting over 1000 branches across 200 cities and an international presence in the UAE, Bangladesh, Bahrain, and Afghanistan. The bank offers various products and services, including corporate and investment banking, consumer banking, securities brokerage, commercial, small and medium enterprises, agricultural, Islamic, and asset financing to private-sector institutions and governments.

In 2018, Bank Alfalah launched its digital banking group, setting a high standard for the industry to follow with its Alfa app. This revolutionary new application brings together an unprecedented range of services and features all in one convenient platform. In 2022, the bank was awarded the best ‘Digital Bank’ and ‘Housing Finance’ across Pakistan, highlighting its commitment to simplifying and improving the financial capabilities of its customers.

About Capital Resource

Capital Resource is a boutique corporate finance advisory and consulting firm with in-depth experience of facilitating private sector infrastructure and focus towards promoting clean energy financing. In the past, the team at Capital Resource has successfully advised private sector corporates in structuring complex financing solutions including local currency credit enhanced financing transactions backed by GuarantCo.