REECL Residential Energy Efficiency CL FW

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The proposed project is to establish a framework facility whereby the EBRD would extend credit lines to Participating Banks (PB) for on-lending to the retail sector for residential energy efficiency projects. EBRD funds of up to EUR 50 million would be complemented by the Kozloduy International Decommissioning and Support Fund (KIDSF) grant funding (the Grant). The Contributors to the KIDSF are the European Commission, Austria, Belgium, Denmark, France, Greece, Ireland, Netherlands, Spain, Switzerland, UK and the Project is being prepared in co-operation with the Ministry of Energy and Energy Resources of Bulgaria. The Grant amounting to EUR 10 million is provided to overcome barriers faced by sub-borrowers in developing/financing and implementing such investments. The Grant will be used to provide: (i) completion fees to sub-borrowers (ii) administration fees to be paid to PBs, on behalf of the borrowers. The Grant is provided on the basis that individual sub-loans meet the objectives of the KIDSF. (iii) technical cooperation aimed at preparation, administration and verification of the sub-projects (see below “technical cooperation”). Discussions are currently taking place with potential PBs. The transition impact of the project derives from the demonstration effects of (i) implementing one of the first residential energy efficiency programmes in the region and (ii) providing long-term commercial financing for energy efficiency in the residential sector. This transaction will provide know-how and financial assistance required for the emergence of a residential energy conservation market, as energy efficiency is often hindered by market imperfections and high start-up costs. In the past residential energy efficiency has only been addressed on a grant-funded and experimental basis. The credit line will be the first commercial scheme of its type, tackling household energy waste using the retail lending market. The proposed project will have positive demonstration effect, particularly with respect to utilising financial intermediaries for investments resulting in rational energy use. Specifically the Project will demonstrate the benefits of rational energy use, provide assistance in energy efficiency related capacity building (among banks and households) and increase financial intermediation. The clients will be Bulgarian PBs which will on-lend the funds to individuals/households planning to undertake energy efficiency investments in the residential sector. Senior loans of up to an aggregate of EUR 50 million to be allocated to PBs in Bulgaria. EUR 50 million from EBRD and EUR 10 million from KIDSF. Screened FI. The aim of this project is, in essence, environmental. Eligible projects will be required to utilise energy efficient equipments and materials compliant with local, EU and internationally accepted norms and standards. Reporting on sub-projects and annual monitoring reports will be provided by PBs. Increased efficiency in energy consumption, reduction of heat transmission losses will lead to a reduction of air pollutants (e.g., SO2; NOx; CO2; particulates) resulting from heat and electricity generation. This is a clear and quantifiable environmental benefit on which the Consultant and the PBs will provide details in an annual environmental report to the Bank. A Consultant, funded on British fund (Department for International Development), was contracted by the EBRD in October 2004 (final report was provided in January 2005) to identify needs and priorities for energy efficiency in Bulgarian dwellings and potential sub-borrowers. A selection process is now ongoing to allow the EBRD to contract with a consultant for the time of the project (2 years), utilising the KIDSF grant resources. The key objective of this assignment is to ensure that the Project is a success by providing technical, administration and marketing services that will: Terry McCallion, Senior Banker, Financial Institutions Team EBRD One Exchange Square London EC2A 2JN Tel. +44 (0)20 7338 7478 Fax: +44 (0)20 7338 7380 E-mail: MccalliT@EBRD.com Serge Gas, Associate Banker, Energy Efficiency Team EBRD One Exchange Square London EC2A 2JN Tel. +44 (0)20 7338 7083 Fax: +44 (0)20 7338 6942 E-mail: gass@EBRD.com