Finnish Business Partnership Programme – Support for Projects in Developing Countries

1. Finnish Business Partnership Programme –Support for Projects in Developing Countries Examples of international private sector investments and financing in renewable energy in the Mekong Region Programme Director Siv Ahlberg / 20 November 2012

2. Finnpartnership -background and objective • Financed by the Ministry for Foreign Affairs, managed by Development Finance Institution Finnfund • The objective is to promote business cooperation between companies in Finland and in developing countriesin order to increase long-term business partnerships • Offers support for developing country projects: • Business Partnership Support (de minimis) • Matchmaking service • Advice and guidance • In close collaboration with businesses and other public stakeholders

3. Finnpartnership - Area of Operation Low Income Developing Countries Other Developing Countries http://www.finnpartnership.fi/developingcountries/

4. Identifying Business Partnerships – Matchmaking in short • Finnpartnership channels business partnership initiatives and opportunities from companies in developing countries to Finnish companies and vice versa • Opportunities are added to the Matchmaking database (www.finnpartnership.fi/matchmaking) where they can be explored • Partnership initiatives can also be forwarded directly to interested parties • Focus sectors: ICT, environment, energy, agriculture • Focus countries: Kazakhstan, Peru, Tanzania, VietNam • Currently around 80 companies are looking for business partners in the service

5. Business Partnership Support – in short • A grant type of seed capital for projects aiming at long-term business partnerships in developing countries • Can be used to cover expenses incurred in the preparatory phase and to cover training and business development • Max 200 000 €/company • 30/50/70 % of approved expenses depending on the size of the applicant and development level of the target country • Contributes to positive development impacts in developing countries and realization of sustainable, long-term business partnerships • Grant can not be allocated to support exports from Finland to developing countries!

6. Number of BPS applications, popular sectors in 2006 – T2 2012 • Support allocated mostly for: • ICT (15 %) • Manufacturing, engineering and machinery (13 %) • Energy (12 %) • Environment (10 %) • Metal and industry engineering (8 %) • Agriculture and food processing (6 %) • Forestry, wood & paper (6 %) • Construction (6 %).

7. Environment and renewable energy projects in the Mekong area 2006-2012

8. Environment and renewable energy projects in the Mekong area 2006-2012

9. Finnish Fund for Industrial Cooperation Ltd. (Finnfund) in brief • State-owned development finance institution • Risk capital for profitable private projects in developing countries and Russia since 1980 • From small and medium-sized companies to large companies in different sectors, both green-field and expansion projects • Long-term financial investor with minority stake, EUR 1-10 million - loans, mezzanine financing or equity • Market-based interest rate – compensation for the risk-taking • Investment criteria include profitability, social and environmental responsibility, development impacts and Finnish interest • Co-financing with other European development financing institutionsand commercial banks. www.finnfund.fi

10. Finnish development policy encourages active enhancement of renewable energy projects Finland promotes the sustainable management of natural resources and environmental protection [among other things] through supporting renewable energy, energy and material efficiency, and related research

11. International private sector investments and financing renewable energy: a few examples

12. Biogas pioneer project in Thailand Who: Thai Biogas Energy Company (TBEC) • Majority shareholder: Finnish PEMF (Private Energy Market Fund) in which Finnfund is an investor • Other shareholders Al Tayyar Energy Ltd from UAE Project aim:To find new biogas projects and apply BOOT (Build, Own, Operate and Transfer) model • Local production of biogas to be used as energy source instead of imported fuel oil • The biogas is recovered from waste waters of starch mills in Thailand • Investments in waste water basins, gas recovery systems, gas lines and generators Incentive programs include: • Very small power producer, VSPP • Clean Development Mechanism, CPM • Gold standard, GS Future: The plants will employ dozens of local people and contribute to a reduction of methane emissions.

13. A.T. Biopower Co. Ltd. (ATB) Who: A.T. Biopower, Thai joint venture, owners from Japan, UAE, Thailand, England and Finland (Finnfund and Private Energy Market Fund PEMF). Project aim:Establishing a biomass-fired power plant (22 MW) in Thailand • The plant burns rice husks to generate electricity and produces special ash for industrial use • Commercial operations started in Dec 2005 Impact: • Rice is Thailand’s most important agricultural product. Properly treated, the by-products of grain production (husks) can nevertheless also be a viable and environmentally friendly source of energy. • In addition, the project creates jobs and income to the poor rural population. A.T. Biopower pays rice mills a fair price for the husks, and transporting the husks also contributes to creating new jobs.

14. Utilizing landfill methane gas in Vietnam Who: Finnish company established in 2008 Project aim: Establishing a joint venture to own and operate power plants utilizing methane gases from landfill sites. Incentives: • Huge market potential: 20 landfills combined in Vietnam produce 400 thousand tons of methane gas annually • Positive environmental effects  possibility to benefit from the Clean Development Mechanism (CDM) by generating Certified Emission Rights (CERs) • Technology allows to sell surplus electricity to the local electricity supplier, and thus alleviates the problem of the increasing electricity consumption in Vietnam. Challenges: • Finding a suitable site (dumping area) and getting a reliable measure of the amount of gas available • Local approval, time consuming bureaucracy • Uncertainty regarding continuity of the Clean Development Mechanism (CDM), decreasing CER prices Future: The project will employ dozens of local people in the following years and generate up to 10 terawatt hours of energy over the next ten years. Technology (equipment, maintenance etc.) will be transferred to local staff. Supported project phases Partner identification Pre-feasibility study Business plan Business case analysis: technical, economic, environmental and social aspects of the project Legislative requirements: needed contracts, operating licenses etc. Building needed network of partners Assessment of waste volumes, choice of plant site

15. Waste to energy in Thailand Who: Company registered in Thailand in 2009 Project aim: Establishing a 10 megawatt waste-to-energy power plant that utilizes industry waste for producing electricity and steam. Challenges: • Problems in acquiring needed licenses and signing contracts with relevant partners. • Problems in organizing the supply chains for obtaining the waste. • The possible impact of unforeseen political decisions. Future: • The power plant will produce steam and electricity by burning up to 75 % of the waste fuel. The electricity will be sold to the local electricity network and the steam to local companies that uses it in their production processes. • The plan is to build several similar power plants in the future. One power plant employs ca 50 persons. Supported project phases Feasibility study Environmental and social impact assessment Training Piloting of environmental technology

16. SaraRasa pioneers pellet production in Indonesia Aim Building a production plant in Indonesia, where SaraRasa will make pellets from agricultural residues. Background Consumption of pellets produced from biomass is on the rise throughout the world. Used for generating heat and electricity, most pellets are consumed in Europe but Asian markets are now taking off. Total world demand for pellets is currently about 15 million tonnes. SaraRasa is Indonesia’s first commercial-scale pellet producer. The technology needed to produce the pellets has been imported from Europe but SaraRasa has developed its own pre-processing system. Project impact Supports a more sustainable use of natural resources and increases the supply of renewable energy in the area. Creates jobs in a poor rural area. Being one of the main industrial employers in the area, the pellet plant directly employs ~ 100 local people and indirectly several hundred more. As the country’s first pellet manufacturer, the project also contributes to creating a viable new business sector in Indonesia.

17. Renewable energy portfolio I • Hydro power project in Laos, 9 MW, debt, under construction • Several hydro power projects in Honduras • 38.5 MW, common shares, under construction • 21 MW, debt, under documentation • 13 MW, preferred shares, in operation, exited • 9.4 MW, preferred shares, under construction • 4.8 MW, preferred shares, under construction • Portfolio of hydro power projects in Sri Lanka and Uganda, debt, first ones in operation

18. Renewable energy portfolio II • Wind parks (4) in Cape Verde, 25,5 MW, common shares, in operation • Fund investments • Central America • South Africa • South-East Asia • Interact Climate Change Facility, co-investment vehicle with European Development Finance Institutions, debt, projects under construction

19. Organisation

20. c/o Finnfund, P.O. Box 391, 00121 Helsinki, Finlandtel. +358 9 3484 3314, fax +358 9 3484 3346fp@finnpartnership.fimatchmaking@finnpartnership.fi www.finnpartnership.fi