KyrSEFF II

Location:

Kyrgyz Republic

Project number:

46712

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

06 Jul 2016

Status:

Board Approved

PSD disclosed:

12 Nov 2015

Sub-projects signed under this framework

Translated version of this PSD: Russian

Project Description

The EBRD is considering establishing a new financing facility of up to USD 35 million to on-lend through local financial institutions for energy and resource efficiency investments in the Kyrgyz Republic. Proposed new facility will be an an extension of the current Kyrgyz Sustainable Energy Financing Facility (KyrSEFF I) established in December 2012 (BDS 12-273), which was utilised faster than expected, confirming the strong demand from PFIs and the market. KyrSEFF II aims to meet this growing demand for energy and resource efficiency by providing an additional USD 35 million, and expanding investment eligibility to include water efficiency and resource efficiency.

Project Objectives

The Facility is intended to continue the momentum developed under KyrSEFF I by encouraging existing Participating Financial Institutions to increase their scope of activities and allowing new partners to get involved in the Facility. In addition, the Facility will also finance on pilot basis water and resource efficiency alongside sustainable energy in eligible sub-projects.

The investment scope is designed to support sustainable energy and resource efficiency investments in wide range of sectors across Kyrgyzstan especially in priority sectors where little progress has been achieved (residential, renewable energy, technology transfer, industries and agribusiness) and create a demonstration mass in sectors where bankable opportunities exist (e.g., SMEs, service industry).

The project will consist of credit lines to local banks and MFIs for on-lending to private businesses, households, individuals, groups of residents, housing associations, condominiums and cooperatives as well as service providers including but not limited to housing management companies (HMCOs), energy service companies (ESCOs) or construction companies for installation of eligible energy &
resource efficiency investments.

In addition to the EBRD financing, the facility will be supported by a grant from the EU through the Investment Facility for Central Asia (IFCA) to fund technical cooperation and incentive payments to the sub-borrowers.

Transition Impact

The project's transition impact will be most prominent in the following areas:

Demonstration effect of energy efficiency lending

KyrSEFF II will generate transition impact by promoting a further increase of lending for energy and resource efficiency purposes. Improved access to loans tailored for energy and water savings will stimulate customers¿ demand and encourage an increased supply of materials and equipment needed for such kind of investments. Greater competition among PFIs and suppliers of eligible materials & equipment will stimulate further development of energy and water savings technologies by decreasing the price of such technologies and promoting the uptake of higher performance materials and equipment. Increased customer demand will contribute to the development of related services to support EE and water efficient investments, namely energy/water management auditors, project developers and sustainable energy/water management technology providers.

Demonstration effect of energy and water efficiency

The Facility aims to demonstrate the benefits of advanced energy and water conservation and of new technologies and be innovative for the Kyrgyz market by improving competitiveness of local businesses, ensuring higher efficiency and better productivity while using fewer resources in a more environmentally friendly manner. Energy shortages coupled with expected increases in energy tariffs,
make energy and resource efficiency a business risk mitigation strategy for local businesses. In addition to micro-economic benefits, KyrSEFF II will contribute to behavioural changes as Kyrgyz businesses and residents apply practices leading to the reduction of the energy and water intensity on a macro-economic scale. Successful energy and water saving sub-projects will serve as case studies for dissemination among local businesses and the population.

Transfer of skills

Through the proposed project PFIs will continue building expertise in assessing and financing energy & resource efficiency investments. Similarly the businesses and technology providers will learn PFIs' requirements and eligibility criteria for such loans. Technical assistance from the EBRD will help PFIs with loan product design and marketing, as well as pre and after loan approval appraisal.

Project will also facilitate information dissemination and direct support of sub-borrowers, which will be part of EBRD's comprehensive technical assistance. This will spread the knowledge and support growth of the market of climate resilience technologies.

Additionally the Project will contribute to strengthening of local technology suppliers and equipment installers and will specifically promote best performing technologies.

Client Information

The Framework will be available to Partner Financial Institutions such as banks and non-bank lending institutions operating in Kyrgyzstan.

EBRD Finance Summary

USD 35,000,000.00

EBRD will provide up to USD 35 million of Debt financing to eligible PFIs in Kyrgyzstan. This financing will be provided in local and hard currencies.

Total Project Cost

USD 35,000,000.00

USD 35 million of loan financing and EUR 9.24 million of EU IFCA grant, of which EUR 3.74 million will be used to cover technical assistance and EUR 5.5 million will be used for payment of incentive grants to eligible sub-borrowers.

Environmental and Social Summary

Categorised FI (2014 ESP). All PFIs will be required to comply with EBRD¿s Performance Requirements (PRs) 2, 4 and 9 and submit Annual Environmental and Social Reports to the Bank. Sub-borrowers financed through the facility will be required to comply with national regulations and standards on environment, health and safety, social and labour as well as the EBRD's E&S eligibility criteria for EE and RE projects.

Technical Cooperation

The Facility will be supported by a comprehensive Technical Cooperation programme that will benefit both PFIs and Sub-borrowers. This will be delivered by the Project Consultant team, which will support sub-project origination, preparation, eligibility checking and assessment, capacity building and training support to PFIs. The Project Consultant will be responsible for overall Facility management and implementation as well as performance monitoring. The Project Consultant will also draw from its experience and knowledge gained from implementing the Facility to identify policy dialogue priorities for EBRD to consider in support of Facility objectives.

TC costs will be covered by the grant provided by the EU Investment Facility for Central Asia (EU IFCA).

Company Contact Information

Ruslan Kurmanbekov
kurmanbr@ebrd.com
+996 312 624022
www.ebrd.com
 

Business opportunities

For business opportunities or procurement, contact the client company.

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