February 18, 2026
Govt launches 10% first-loss credit guarantee for fan replacement program to boost energy efficiency
Financing for PM FRP offers loans between Rs10,000 and Rs300,000 with a repayment term of 6 to 18 months, while the government will absorb first 10% of loan losses to promote energy-efficient fan replacements
February 18, 2026
The federal government has announced a 10% first-loss credit guarantee for banks financing the Prime Minister’s Fan Replacement Program (PM FRP), aimed at improving energy efficiency and reducing power consumption across Pakistan.
The financing options for the PM FRP set a minimum loan limit of Rs10,000 and a maximum of Rs300,000, with a repayment period ranging from 6 to 18 months. The pricing will be based on the one-year KIBOR rate plus 2%, and an additional Musawama profit of Rs500 will be included in the first installment. The KIBOR rate will remain fixed throughout the financing period.
The Ministry of Energy (Power Division), through a notification issued on February 6, 2026, outlined the framework and terms for the initiative.
According to the State Bank of Pakistan (SBP), the government will absorb the first 10% of losses on loans provided by banks under the program, which will help finance the replacement of old, inefficient fans with energy-efficient models.
The SBP has urged banks to complete system integration with the National Energy Efficiency & Conservation Authority (NEECA)’s online portal to ensure smooth implementation. NEECA will oversee the program’s nationwide rollout, coordinating with power distribution companies (DISCOs), participating banks, and fan manufacturers.
The program will operate through a web portal hosted by the Punjab Information Technology Board, linked to banks, DISCOs, including K-Electric, and registered fan manufacturers. Public awareness campaigns will be launched to encourage consumer participation.
Under the program’s framework, DISCOs will provide data to NEECA’s portal for consumer eligibility assessments, which will be used by participating banks for customer outreach. The SBP will assist in onboarding banks and ensure the payment mechanism for processing claims under the first-loss credit guarantee.
The Ministry of Finance will ensure necessary budget allocations and facilitate the settlement of credit guarantee claims. The program is designed to replace old, inefficient fans with energy-efficient models, reducing electricity demand, easing pressure on the national grid, and lowering consumer energy costs.
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