Access to energy is essential to reduce poverty. Globally, over 1.2 billion people still do not have access to electricity. About 2.8 billion use solid fuels — wood, charcoal, coal, and dung — for cooking and heating.
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Project to mobilize ease of access to finance for demand side energy efficient initiativesNew Delhi, March 31, 2015 - The World Bank and the Government of India today signed a $43 million grant and gu... Show More +arantee agreement towards the Partial Risk Sharing Facility for Energy Efficiency (PRSF) project, that will help enterprises and Energy Service Companies (ESCOs) mobilize commercial finance for investments in energy efficiency initiatives.India has substantial untapped energy efficiency (EE) potential across various sectors. This pilot operation will help address various market barriers that impede energy efficient practices and financing, by providing coverage to reduce the risks perceived by commercial institutions in financing demand side EE projects. By using innovative financial instruments, the Project has the potential to leverage funds and unlock private sector financing to over three-times of World Bank funds. It will also help build the capacity of ESCOs to structure and seek financing; and that of financial institutions to finance EE projects on a commercially-sustainable basis. The Agreement for the Partial Risk Sharing Facility for Energy Efficiency (PRSF) Project was signed by Tarun Bajaj, Joint Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India; Kshatrapati Shivaji, Chairman & Managing Director, Small Industries Development Bank of India (SIDBI), on behalf of SIBBI; Mohit Khatri, Deputy General Manager, Energy Efficiency Services Limited (EESL), on behalf of EESL; and Onno Ruhl, World Bank Country Director in India, on behalf of the World Bank. The $43 million project consists of a partial risk sharing facility of $37 million -- funded from a Global Environment Facility (GEF) contribution of $12 million backstopped by a Clean Technology Fund (CTF) contingent guarantee of $25 million -- and a technical assistance and capacity building component of $6 million funded from GEF. The PRSF project is a landmark project as it is the first guarantee operation of the World Bank in India without a financial counter-guarantee provided by the Government. “Improving energy efficiency will not just ease India’s energy shortfalls but also save millions of tonnes of CO2 from polluting the air each year,” said Onno Ruhl, World Bank Country Director in India. “The biggest potential for these savings lies with small and mid-tier users such as MSMEs, town municipalities and even individual building owners, who are unable to access finance for EE projects. This innovative project will ease this constraint in the EE eco-system, leading thus to an EE transformation in India.”The project will benefit a range of institutions and stakeholders that comprise the EE eco-system: namely, micro small and medium enterprises, large industries, commercial entities, building owners, municipalities responsible for providing street lighting; the banking sector responsible for financing EE; and the ESCO industry responsible for implementing EE projects. The PRSF consists of the following components:Partial Risk Sharing Facility: This component supports establishing and operating the Facility to provide Sub-Guarantees to Sub-Financiers. The partial risk sharing facility for energy efficiency is managed by SIDBI and totals US$37 million. This facility would provide partial credit guarantees to cover a share of the default risk that financial institutions face in extending loans to eligible EE sub-projects.Technical Assistance and Capacity Building: The technical assistance and capacity building component of US$6 million, is funded by GEF and to be managed by SIDBI and EESL. This component supports technical assistance, capacity building, and operations support comprising, market development, management and information systems, and standard documentation systems. “While contributing to India’s National Mission for Enhanced Energy Efficiency, PRSF project will demonstrate innovative modality of energy savings performance contracting through ESCOs to catalyze large scale EE market transformation,” said Ashok Sarkar, Senior Energy Specialist and Task Team Leader, World Bank. “ The lessons learned in similar EE initiatives, such as from China’s successful ESCO industry, were used to design PRSF, while adapting it to address the barriers for scaling up ESCO-driven EE investments in India.”The PRSF project would close by 2022. However the CTF Facility could continue with Funds available for up to 20 years. It is estimated that the program for risk-sharing coverage through partial credit guarantees will last for 15 years. Show Less -
A $457.5 million Electricity Modernization Project to support the Government’s goalsWASHINGTON, March 31, 2015—Over 630,000 Kenyans will benefit from access to electricity, existing consumers will enj... Show More +oy better quality of electricity services, and the Kenya Power and Lighting Company (KPLC) will be financially stronger as a result of a new project approved by the World Bank Group today.The World Bank Group’s Board of Executive Directors approved a total of $457.5 million for the Kenya Electricity Modernization Project. The amount includes an International Development Association (IDA)* credit of $250 million, an IDA guarantee of $200 million and a $7.5 million grant from the Strategic Climate Fund-Scaling up Renewable Energy Program. The IDA guarantee will enhance KPLC’s credit quality and enable it to raise about $500 million of new commercial debt with lower interest rates and longer tenors to replace existing debt that is placing a heavy burden on the company.“We are making this significant and innovative investment in Kenya’s power sector to expand electricity access to low income households and small businesses as part of the nation’s push for shared prosperity” says Diarietou Gaye, World Bank Country Director for Kenya. “Modern, reliable electricity will improve the quality of life of Kenyans and underpins enhanced competitiveness of the Kenyan economy”Innovation in the new project is reflected in the complementarity of its various elements including technical and financial support for the Government’s electrification “Last Mile” program, financing for new connections and improved service quality, and credit enhancement for KPLC.The IDA credit, together with the grant, will be used by the Government, KPLC and the Rural Electrification Authority (REA) to finance infrastructure investments and also to support technical assistance and training activities of KPLC, REA, the Energy Regulatory Commission and the Ministry of Energy and Petroleum. The IDA Guarantee will allow KPLC to significantly reduce its financing costs, improve liquidity and continue investing in improving the quality and coverage of its services.“KPLC is the cornerstone of the energy sector in Kenya and its financial strength is critical to the sector’s sustainability and continued growth. A financially strong KPLC is essential to continue attracting much needed private investment to the sector,” say Pankaj Gupta and Lucio Monari, Practice Managers. “Improved service quality and more reliable electricity service that reduces the duration of outages will allow businesses to operate more consistently and reduce their dependence on costly standby generators.”In approving the new credit, the Executive Directors were briefed on the recent action taken by the Government to improve governance and to hold public officers accountable.The Bank’s Country Partnership Strategy (CPS) for Kenya and the Government’s Vision 2030 identify access to modern, reliable electricity as critical to enhancing the prospects for Kenya’s growth, regional competitiveness, and shared prosperity. The World Bank Group will continue to support the private sector, which has such a critical role in electricity infrastructure development in Kenya.About IDA* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.8 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $18 billion over the last three years, with about 50 percent going to Africa. Show Less -