KAZSEFF - Kazakhstan Sustainable Energy Finance Facility

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The EBRD is considering the establishment of a USD 75 million framework facility in the form of dedicated credit lines to local financial institutions for on-lending to private sector companies to finance investments in sustainable energy. Eligible investments will include energy efficiency in the industrial sector and small renewable energy projects. The Project is expected to have two sources of transition impact: Demonstration effects of improved energy efficiency among sub-borrowers The Project will generate transition impact by demonstrating the benefits of energy conservation and promoting the expansion of energy efficiency lending in the energy inefficient Kazakh economy. It will have positive demonstration effects particularly with respect to utilizing financial intermediaries for investments resulting in rational energy utilization; something that has not yet been widely utilized. The Project will demonstrate the effects of rational energy utilization for improving industrial competitiveness in light of the rising energy costs in the region. Transfer of skills The Project is also expected to transfer and build expertise, among both banks and companies, related to energy efficiency. The banks will build expertise in assessing the risk and creditworthiness of clients for energy efficiency loans, while the enterprises are expected to become more familiar with banks requirements for providing energy efficiency loans. The Project is expected to contribute to lowering the transaction costs for financing energy efficiency and the Project’s success would lead to sustainable lending by local banks. Local banks established and operating in Kazakhstan. A finance facility for local banks in Kazakhstan in the form of senior loans. The proceeds will be used by participating banks to lend to private industrial companies for implementing energy efficiency and/or small renewable energy investments. EBRD will provide loans under this framework for a total amount of up to USD 75 million. Screened FI. Each sub-project will undergo a review to confirm, among other things, that each sub-project is compliant with national standards for environment, health, safety, labour and public consultation. The procedures for this review will be agreed between the independent consultants and the bank. Where and if required, special attention will be paid to projects known to be sensitive, such as small hydro cascades and wind power developments. The Project will be supported by a consortium of international and local consultants already contracted by EBRD to market the facility, prepare a sub-project pipeline, carry out energy audits, review investment proposals and provide implementation support. Funding for the technical cooperation package has been secured from the following donors: “Japan-Europe Cooperation Fund” “Norwegian Ministry of Foreign Affairs” “UK-EBRD Sustainable Energy Fund” Funding from a fourth donor, the "German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety", is at an advanced stage of negotiation and is expected to be secured by November/December 2008. Michalis Kiourktsoglou Financial Institutions EBRD One Exchange Square London EC2A 2JN Tel: +44 20 7338 6734 Email: kiourktm@ebrd.com