The study serves to clarify doubts on the potential of commercial microcredit as a strategic vehicle of implementing of small-scale biogas plants in Sri Lanka, as an alternative to subsidy-based process. The quantified sum of unsubsidized microloan interest born by the biogas users in a modeled situation of maximum potential of the biogas sector financed through microfinance institutions is compared with national technology savings on a macro level. The analysis concludes that an economic justification for the microfinance-fuelled implementation of small-scale biodigesters employing a market-based approach does exist. Annual savings on macroeconomic level surpass the annual cost expressed as a sum of unsubsidized interest. The study furthermore proposes a three-party credit contract, which prevents credit defaults caused by the lack of customary after-sales care by integrating the provision of service providers into a contractual agreement with both the user and the financing source, thus assuming part of credit responsibility.
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