China Energy Efficiency Financing II

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The objective of the Second Energy Efficiency Financing Project for China is to improve the energy efficiency of selected enterprises, and thereby reduce their adverse environmental impacts through scaling-up commercial lending for energy efficiency investments. There are two components to the project. The first component of the project is energy efficiency investment sub-projects. This component will provide sub-loans to sub-loan Beneficiaries for carrying out energy efficiency sub-projects. It consists of an energy efficiency lending program of US$100 million over four years. Minsheng, in turn, will lend the funds to industrial enterprises and/or energy service companies for eligible energy efficiency investment sub-projects. The size of each sub-loan will be below US$20 million equivalent in order to diversify potential project risks and increase the development impacts of the International Bank for Reconstruction and Development (IBRD) loan. The lending rates will be determined based on market conditions and will adequately cover the financial and operating costs and provide for a reasonable profit margin for Minsheng. The second component of the project is technical assistance and capacity building. This component will strengthen the capacity of Minsheng in: (a) identifying and appraising sub-projects and conducting eligibility due diligence on Sub-loan Beneficiaries; (b) developing credit and risk management processes for energy efficiency investments; (c) managing the social and environmental impacts of the Project and its future energy efficiency lending portfolio; (d) developing a low-carbon lending business; and (e) exploring the application of the Equator Principles in its lending practices.