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EUR50 million for landmark energy-efficiency facility in Bulgaria
The EBRD is investing up to €50 million into a new facility that will help promote energy efficiency and renewable energy projects in private sector businesses across Bulgaria.
In the first project of its kind in central and eastern Europe local participating banks will receive funds that they can then lend to private-sector industrial enterprises. Businesses will use the finance to improve energy efficiency, by, for example, introducing better energy consumption, automation, control and heat recovery systems, and promote the use of renewable energy fuels.
There is a tremendous potential for improvement in energy efficiency in Bulgaria, where energy consumption relative to total output is more than seven times the average of OECD member countries. Olivier Descamps, EBRD Business Group Director for southern and eastern Europe, said the Bank, working closely with the Ministry of Energy and Energy Resources, has set up an initiative which is very important for Bulgaria. In a country which ranks amongst the worst in central and eastern Europe in terms of using energy inefficiently, Bulgarian businesses should take more actions to use energy more efficiently, said Mr Descamps. This facility will provide businesses with access to capital and incentives to do just that, he added.
The first three local banks to participate under the facility will be United Bulgarian Bank, the third largest bank in Bulgaria, which will receive a €15 million loan; Bulgarian Post Bank, the country’s fifth largest bank, which will receive a €5 million loan; and Unionbank, a specialist in the small and medium-sized enterprise sector, which will receive a €3 million loan. As many as three further banks will participate in the facility. Sub-loans are likely to be in the range of €20,000 to €1.5 million, and more than 100 sub-projects will be implemented.
A further €10 million is being provided in grant financing from the EBRD-managed Kozloduy International Decommissioning Support Fund, set up in 2000 with donor funds from the European Union, a number of EU member countries as well as Switzerland to help decommission part of the Soviet-era nuclear plant and address issues resulting from the decommissioning by improving energy use in Bulgaria. These funds will help develop projects, promote better energy management, provide sub-borrowers with financial incentives that act as a catalyst for investments, and overcome barriers to raising financing for such projects.
Representatives from the participating banks said this facility is appealing because it is an innovative tool and will help businesses cut down costs through improved use of energy. They added that businesses in Bulgaria may be unaware of the potential savings that can be made by using energy more efficiently, and with financing now being made available, they should take advantage of the overall benefits.
Mr Descamps added that the project is being used as a pilot scheme in Bulgaria, and if successful, could be the template for other countries in the region, benefiting businesses and the environment alike. The EBRD is the largest single investor in Bulgaria with more than €848 million invested in over 46 projects. Working with partners from the private sector, the Bank has mobilised a total of €3.2 billion.
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