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Transactions
eligible for the Program's support include
investments in projects which improve efficiency
of energy use in buildings, municipalities,
industrial processes and other energy end-use
applications. These include, for example,
municipal street-lighting
upgrades, district heating system modernizations,
industrial process improvements, building control
systems, motor system improvements, boiler
upgrades and cogeneration plants. Many EE
projects are economically attractive and can be
developed and structured so that the energy cost
savings enjoyed by the end-user exceeds their
finance payments to implement the project.
However, most financial intermediaries,
especially in emerging markets, are reluctant to
finance these transactions due to their
unfamiliarity with such projects and the
perceived
weak client/project credit profiles.
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CEEF: Building On a
Successful Model in Hungary
IFC has operated a successful pilot EE finance
guarantee program under this scheme in Hungary.
The Hungary Program has made the financing of EE
projects possible in many areas where FIs had not
previously been willing to extend financing. Such
projects not only produce significant
environmental and economic benefits, but also can
provide social benefits as well. Some of the
examples include: EE investment projects by small
enterprises which improve their competitiveness,
street lighting projects by small towns and
villages in the poorest parts of the country
where poor or limited street lighting services
previously existed; and the replacement of
outdated heating technologies in hospitals
resolving the problem of frequent disruptions in
heating services in these entities. |
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The
investment projects supported in Hungary have
demonstrated an excellent payment performance.
The Program has greatly expanded lending for
energy efficiency projects by Hungarian banks
both for loans which use the guarantees and those
which don't. As a result, participating FIs have
developed profitable new business lines in
sectors not previously served by banks, thus
allowing them to grow their lending business in
the highly competitive Hungarian capital market. Based on the success of the Hungary
pilot, IFC has expanded its Program into five
additional Central European countries: Czech
Republic, Estonia, Latvia, Lithuania, and
Slovakia. CEEF Program operations commence in
these countries in December 2002.
CEEF:
Practically Designed for Sustained Market Impact
The Program's innovative
partial guarantee structure will enable IFC to
leverage over $225 million in private capital
investments in energy efficiency. Such investment
will contribute to the competitiveness of these
economies as well as improving local and global
environmental conditions. The facility represents
an important tool to support each of the national
strategies for meeting EU accession goals and
targets.
The project is different from
other approaches taken in the region to promote
energy efficiency in its focus on mobilizing
private capital investment through
commercially-based investment.
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As
such, CEEF is designed to ensure a lasting
developmental impact by building a
self-sustaining market for financing EE
investment. The project works through multiple FI
partners in seeking to catalyze investment across
a broad range of end-user groups and market
segments. In addition, the project's technical
assistance component is targeted at building
energy efficiency finance expertise in the
financial sector and among local project
developers. By creating incentives for local FIs
to enter the EE financing market, the Program
helps to increase the local financial sectors'
experience and capacity to provide EE project
finance on an ongoing, and eventually, on an
independent basis. The case of the Hungary pilot
has demonstrated this evolution already, where by
five years after the Program's inception, FIs are
now independently financing some of the EE
projects types for which they previously sought
the Program's support. CEEF Program Contacts
Program Manager
Russell Sturm
Principal Projects Officer
Telephone. +1.202.458 9668
Email: rsturm@ifc.org
Czech Republic and Slovak
Republic Regional Manager
Pavol Vajda
CEEF Regional Program Manager
Telephone. +421.903.474 656
Email: pvajda@ifc.org
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The International
Finance Corporation (IFC), in cooperation with
the Global Environment Facility (GEF), has
developed an innovative guarantee program to
support the financing of energy efficiency (EE)
projects in six Central European countries whose
economies are 3-5 times more energy intensive
than EU standards. The
program works in partnership with local financial
institutions (FIs) and provides partial
guarantees to share in the credit risk of EE
finance transactions which the partner FIs would
fund with their own resources. The guarantee
program is also accompanied by a multi-faceted
donor-funded technical assistance (TA) program.
The TA program is practically oriented and
flexibly structured to support participating FIs
in developing and marketing specialized financial
products for the EE sector. The TA program also
directly supports project developers in
effectively developing bankable EE projects for
financing by participant FIs.
