Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Johnity Ongkili said with a conducive funding ecosystem, the government is confident it can achieve its renewable energy generation target of 7,200 megawatts (MW) by 2020. The solar energy will contribute 2,080MW to it. Pic by NSTP/AHMAD IRHAM MOHD NOOR

PUTRAJAYA: Malaysia will issue more green sukuk to finance environmental-friendly infrastructure projects, and subsequently bolster its position as the key driver in the green Islamic financial market.

Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Johnity Ongkili said with a conducive funding ecosystem, the government is confident it can achieve its renewable energy generation target of 7,200 megawatts (MW) by 2020. The solar energy will contribute 2,080MW to it.

"We are capable to raise the nation's energy output via solar through various initiatives- the Feed-in Tariff (FiT), large scale solar (LSS) programme and Net Energy Metering.

"These initiatives can fulfill the country's commitment to reduce its green house gas emission as stipulated under the Paris Agreement made in 2016," he said today.

Ongkili said this before the exchange of documents on green sukuk funding for two large-scale solar projects under LSS programme introduced in 2015.

Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi witnessed the exchange of such documents between Tadau Energy Sdn Bhd and Quantum Solar Park Semenanjung Sdn Bhd and their investors.

Prime Minister Datuk Seri Najib Razak made a brief appearance before the ceremony started and took a group photo with the companies’ representatives.

Green sukuk are Shariah-compliant investments in renewable energy and other environmental assets. The proceeds are used to finance construction, refinance construction debt, or finance the payment of a government-granted green subsidy.

In July this year, Malaysia, through Tadau Energy, issued the world’s first green sukuk – RM250 million Sustainable Responsible Investment (SRI) sukuk – to finance the construction of an LSS project in Kudat, Sabah.

Quantum Solar, meanwhile, announced the world’s largest green SRI sukuk issuance of RM1 billion recently.

The wholly owned special-purpose vehicle of Quantum Solar intends to raise money to fund a portfolio of three large-scale solar photovoltaic (PV) plants in Gurun, Kedah, Jasin in Melaka, and Merchang, Terengganu.

The projects are expected to create up to 3,000 jobs, generate electricity for up to 93,000 households and reduce carbon emissions by 210,000 tonnes annually.

Malaysia was reported to have an ideal ecosystem to facilitate the growth of green sukuk as sukuk investor base was larger than the conventional investor base.

Banks in the country had also begun to shift its focus on projects linked to green environment and environmental sustainability.

More developers are reported to embark on projects that can conserve the energy by using solar energy, allowing for a stronger traction for the green sukuk in the future.

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