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Concessional Loan Scheme  with Mechanism for Scale-up using “Energy Saving Equipment List"

Concessional Loan Scheme  with Mechanism for Scale-up using “Energy Saving Equipment List". BEE-UNIDO workshop on “Financing of Energy Efficiency and Renewable Energy for SMEs” Nov.8-19 th , 2009. Keiji KATAI Representative Japan International Cooperation Agency (JICA)

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Concessional Loan Scheme  with Mechanism for Scale-up using “Energy Saving Equipment List"

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  1. Concessional Loan Scheme with Mechanism for Scale-up using “Energy Saving Equipment List" BEE-UNIDO workshop on “Financing of Energy Efficiency and Renewable Energy for SMEs” Nov.8-19th , 2009 Keiji KATAI Representative Japan International Cooperation Agency (JICA) Katai.Keiji@jica.go.jp

  2. Grant Aid New JICA Grant (※) MOFA Technical Assistance bilateral assistance ODA JICA October, 2008 - Yen loans JBIC multilateral assistance international authority 1. “JICA”: The World’s Largest Bilateral Aid Agency US$ 10,280 million (FY2008 Budget Estimate) (※) A part of grant assistances will be provided by MOFA and the rest of the financial assistances will be shifted to JICA. 2

  3. “JICA”: Focus in India Transportation Employment Energy & Climate Change Economic Growth Basic Social Service Inclusive Growth Faster Growth India Environmental Improvement Poverty Reduction Rural Livelihood Urban Environment Natural Environment 3

  4. JICA’s Initiatives～ODA Loans more than 50 years in India～ Aggregate Committed Amount (upto 2007): Electric Power & Gas: 1,021 billion JPY Transportation: 442 billion JPY Water Supply, Sewerage and Sanitation: 343 billion JPY Forestry: 169 billion JPY →2,437 billion JPY (approximately US$ 24 million) Annual Commitment: USD 2 ~2.5 billion / year 4

  5. 2. MSME Energy Saving Project Consultant Technical Assistance GoI guarantee E/S Project (MSME) Clusters Consultant Sub-Loan E/S Project (MSME) 9.5-10% E/S Project (MSME) Concessional Loan PLIs/NBFCs Sub-Loan Sub-Loan PLIs/NBFCs E/S Project (MSME) （SIDBI＝ Small Industries Development Bank of India) 5

  6. Finance Scheme - Catalyst • JPY 30 billion / Approximately INR 1500 Cr • Financial Parameter • Interest Rate: 9.5 – 10.0% p.a. to end user • Minimum Borrower Contribution: 25%(Existing) / 33% (New Company) • Eligible Borrower: Small & Medium Enterprise in any industry at anywhere in India • Eligible Investment: Those items in the Energy Saving Equipment List JPN’s Experience 6

  7. 3. Major obstacle for energy saving investment – Procedure for Loan Sanction • Financial Institutes (Branch Officers) • Technically not equipped with reviewing individual energy saving investment • Time consuming process is not preferred • MSMEs • Busy with day-to-day operation • Not aware of detailed energy saving potential • Difficult to prepare Project Report for energy saving investment from “technical” and “time” constraints • Detailed Information sharing with other Units is not easy - competition 7

  8. JICA’s approach “Energy Saving Equipment List” EASY & QUICK reference for Lender, Borrower & Equipment Supplier Not Fine Tuned to Individual Unit (Sub-Optimal Approach) At least 15% of Energy Saving Please visit website:http://jica.org.in → Energy Saving Equipment List JPN’s Experience 8

  9. Sample --- Common Equipment 9

  10. Sample --- Industry Specific Equipment 10

  11. Activities Cycle • One-to-one FU • Feedback to the List • Monitoring of Impact Meeting with Industrial Association, SIDBI, BDS providers • - Financial Opportunity • & Tech Options • 11 Campaigns are • already carried out • Technical Brochure • to be prepared • - Feedback to Energy Saving • Equipment List 11

  12. Progress… • Started Dec. 2008 • Taking place at Mumbai, Thane, Nasik, Bangalore, Hyderabad, Ludhiana, New Delhi, Tirupur, Jallandhar, Coimbatore,Rajkot, Surat, Chandigarh… (*above are SIDBI Branch Offices) • Total 299.85Cr / 773 Projects are sanctioned under direct loan from SIDBI. (as of Sep. 2009) 12

  13. 4. Way Forward Improve “Energy Saving Equipment List” for Specification & Bench Mark information Expand “the List” approach to major financial institutions (currently SFC & IREDA. SBI and other FIs are under discussion) Mechanism for continuous updating (Star Rating?) 13

  14. Thank You

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