EBRD promotes energy efficiency in Turkey

By Sergiy Grytsenko

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The EBRD is continuing to promote energy efficiency and renewable energy projects in Turkey by providing Vakifbank with US$ 100 million for on-lending to local private companies investing in mid-size sustainable energy projects.

The financing to Vakifbank is extended under the EBRD’s Mid-size Sustainable Energy Financing Facility, MidSEFF, which was launched in December 2010 and which forms an important component of the EBRD’s support for Turkey’s long-term energy strategy. MidSEFF funding is being closely co-ordinated with the European Investment Bank (EIB).

In this latest financing, the EBRD is providing US$ 100 million to Vakifbank for on-lending to the private sector for making investments in renewable energy, industrial energy efficiency and waste-to-energy projects.

“Improving energy efficiency is one of the EBRD’s key priorities in our countries of operations. The MidSEFF fosters rational energy use coupled with the acceleration and expansion of private investments in renewable energy sources. All this aims to support a clean energy transition in Turkey. It will reduce the reliance on fossil fuels and help meet the country’s energy needs in an environmentally sustainable manner,” said Michael Davey, EBRD’s Director in Turkey.

The MidSEFF funding is provided through a loan financing to Vakifbank’s Finance Company as part of the existing Diversified Payment Rights securitisation programme established by Vakifbank. Importantly, the financing provides Vakifbank with 12 year funding which is a longer maturity than is otherwise typically available for on-lending to Turkish clients. The funding is achieved through the securitisation of current and future hard currency Diversified Payment Rights, which is an established market instrument used by Turkish banks to raise long-term funding in the capital markets.

Vakifbank is one of the country’s six largest commercial banks and the second largest state-controlled bank in Turkey. To date the bank has over 500 branches in Turkey and abroad.

This transaction with Vakifbank is the third financing under MidSEFF. The EBRD will offer a total of €400 million which will consist of €300 million of funding to participating Turkish banks and €100 million of direct funding by the EBRD to selected sub-projects financed under the MidSEFF. Since December 2010, the EBRD has extended financing to Türkiye Garanti Bankası A.Ş. and DenizBank. Another Turkish bank, Akbank, is expected to benefit from the MidSEFF in 2011.

The MidSEFF will be supported by a comprehensive technical assistance programme, funded by the EU and other donors, to support the preparation and appraisal of MidSEFF sub-projects and develop the voluntary carbon market in Turkey.

In Turkey, the EBRD actively supports renewable and sustainable energy, small business development in the regions, agribusiness, municipal and environmental infrastructure, and privatisation.

Since the beginning of its operations in Turkey in 2009, the EBRD has committed nearly €650 million across 27 private sector projects with a total project value of almost €2 billion. In 2010, the EBRD invested approximately €500 million in Turkey.

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