ECF guarantee for energy efficiency projects

by Hiran H. Senewiratne

The Energy Conservation Fund (ECF) has established a Sustainable Guarantee Facility (SGF) to provide repayment guarantees to financial institutions (PFIs) for loans made to targeted energy efficiency improvement projects.

The ECF has allocated Rs 50 million for this purpose and these loans could be obtained from banks for prospective industrialists, USAID Senior Energy Consultant M. S. Jayalath told the Daily News.

He said that with this allocated sum of Rs 50 million they intend to support Rs 400 million worth of projects in the country. At present they are in the process of identifying projects to set up energy efficient methods in the industrial sector.

The main purpose of the SGF is to overcome the major barrier faced by energy efficiency projects, namely the lack of collateral, by providing a repayment guarantee that will act as a collateral substitute, he said.

Lending institutions that provide financial assistance to energy efficiency projects will now have the option of requesting repayment guarantees from ECF when supporting energy efficiency investments, he said.

An operating guideline for this purpose was finalised by the ECF and PFIs at a recently concluded stakeholder-training workshop, conducted by USAID under the South Asia Regional Initiative for Energy.

The purpose of these operating guidelines is to provide guidance to SGF staff and to participating bank staff on the policies and procedures for considering loan guarantees under the Sustainable Guarantee Facility.

Further technical assistance is provided by USAID to the ECF, Banks and Developers to develop pilot projects. Registration of institutions for pilot projects is currently being carried out by the ECF.

First three to five projects are expected to receive guarantees from the ECF by end of February. Any industrialist who has a project proposal on energy conservation for an industry could obtain loans from any bank, Jayalath said.