Recognising the role played by the leasing sector in funding the acquisition of energy efficient equipment, the EBRD has provided a 400 million rouble loan to promote energy savings by the small and medium sized business clients of a Russian leasing company.
The four-year loan to Russia’s BOT Lease (Eurasia) LLC, an affiliate of Japan’s Mitsubishi UFJ Financial Group, is the first such transaction since the EBRD decided to include leasing companies in a USD 300 million Russian energy efficiency programme.
BOT Lease (Eurasia) LLC is planning to utilise expertise of its Parent company, BOT Lease Co., Ltd (Japan), in financing energy saving and energy efficient equipment, with particular focus on construction and mining sectors clientele in the Russian Far East.
In 2009, the Bank established its Russian Sustainable Energy and Carbon Efficiency Facility, which originally only targeted banks. The Facility now also extends to leasing.
The EBRD has for many years been building up its portfolio of loans to Russian leasing companies, but this loan is the first leasing one where the use of proceeds is specifically designated for financing energy saving projects.
The crisis which hit Russia in 2008 helped put energy efficiency at the top of the economic agenda as firms raced to cut costs in a country where potential savings are estimated at 45 percent of current energy consumption.
Outdated equipment is a major factor behind Russia’s intensive use of energy and leasing can play an important role in bringing these levels down as it is one of the most popular financing mechanisms for equipment replacement.
Leasing is structurally important for the Russian economy as it provides basic funding in a country where the limited availability of medium to longer-term funding has always been the main obstacle to capital investment, especially for small businesses.
For the first time since the crisis, Russian leasing volumes last year exceeded the previous peak achieved in 2008, climbing to over USD 40 billion, but the share of GDP this represented was at 2.4 percent, still behind the 2008 peak of 3 percent.
Overall, the EBRD has provided EUR 2.1 billion in energy efficiency funding for its Russian projects since it launched its Sustainable Energy Initiative in 2006. This EBRD programme has saved Russia nearly nine million tonnes of oil equivalent and cut carbon emissions by nearly 17 million tonnes over the past six years.