NDB approves Rs. 5.4 bn for renewable energy projects

With the objective of participating in developing non conventional renewable energy projects in the capacity of a development financier, NDB played an active role in funding 26 mini hydro power projects promoted by both small scale project developers and large companies.

NDB was able to fulfill its development financier role by assisting mini hydro projects with assistance to connect an aggregate installed capacity of approximately 75 MW to the national grid.

The total cost of the above mentioned projects were approximately Rs 8.5 billion while NDB’s contribution in terms of financial assistance amounted to approximately Rs 2.8 billion.

In addition, NDB also partnered with the developers through lending (approximately Rs 940 mn) for diverse financial needs of power companies to a value of approximately Rs 1.0 bn for equity investments in new power projects and for strengthening of financial performance of some of the companies.

NDB is proud to be one of the financial partners to the nation’s first ever wind power project, thus playing a pioneering role in assisting the development of alternative sources of energy in the country. Since then, NDB has approved facilities aggregating to approximately Rs 1.6 bn for the purpose of financing wind power projects in Kalpitiya with an estimated installed capacity of 35 MW.

While projects with installed capacity of 20 MW have already been connected to the national grid, two other projects with an aggregate capacity of 15MW are being implemented.

In addition to active role played in mini-hydro and wind power sectors, NDB is now in a stronger position to evaluate and appraise biomass projects which is still a comparatively new experience to the country.

This is made possible with the experience it gained through preliminary evaluations carried out for several biomass projects and also through the experience it gained by funding the country’s first ever biomass power project.

NDB has moved beyond traditional boundaries of financing projects and stretched its professional services to take up the additional responsibility of playing the lead role in some of the syndicated financial packages and co-financed deals for some of the renewable energy projects.

NDB's role in financing renewable energy projects

The endeavor to implement renewable energy technologies have been facilitated through dedicated credit lines from multilateral agencies such as World Bank through Energy Services Delivery Project (ESDP) which provided an initial support to the sector.

This was followed by Renewable Energy for Rural Economic Development (RERED) which was with the objective of promoting the private sector participation in power generation and encouraging provision of access to electricity for rural households. NDB in its development banking operations played a significant role under these schemes by financing several mini hydro power projects and wind power projects.

Mini hydro and wind power projects funded by NDB

NDB has been actively engaged in funding mini hydro power projects over a decade and has been a participating credit institution (PCI) in both the above credit lines. With the objective of participating in developing non - conventional renewable energy projects in the capacity of a development financier, NDB played an active role in funding 26 mini hydro power projects promoted by both small scale project developers and large companies.

NDB hence was able to fulfill its development financier role by assisting mini hydro projects with assistance to connect an aggregate installed capacity of approximately 75 MW to the national grid. The total cost of the above mentioned projects were approximately Rs 8.5 billion while NDB's contribution in terms of financial assistance amounted to approximately Rs 2.8 billion.

In addition, NDB also partnered with the developers through lending (approximately Rs 940 million) for diverse financial needs of power companies to a value of approximately Rs 1.0 billion for equity investments in new power projects and for strengthening of financial performance of some of the companies.

NDB is proud to be one of the financial partners to the nations first ever wind power project, thus playing a pioneering role in assisting the development of alternative sources of energy in the country.

Since then, NDB has approved facilities aggregating to approximately Rs 1.6 billion for the purpose of financing wind power projects in Kalpitiya with an estimated installed capacity of 35 MW. While projects with installed capacity of 20 MW have already been connected to the national grid, two other projects with an aggregate capacity of 15MW are being implemented.

In addition to active role played in mini-hydro and wind power sectors, NDB is now in a stronger position to evaluate and appraise biomass projects which is still a comparatively new experience to the country.

This is made possible with the experience it gained through preliminary evaluations carried out for several biomass projects and also through the experience it gained by funding the country's first ever biomass power project. With over 3 decades of project financing experience and the in-house legal expertise available, NDB not only plays a role of financial partner in these projects, but more of a project partner role where advice on project management and legal aspects are made available to the promoters and this is undoubtedly appreciated by the promoters as value added services which could not be measured in monetary terms.

The package of services offered by NDB not only ensured the successful implementation of the project but also satisfactory returns to both the promoters as well as the Bank thus creating a win-win solution for both parties. NDB has moved beyond traditional boundaries of financing projects and stretched its professional services to take up the additional responsibility of playing the lead role in some of the syndicated financial packages and co-financed deals for some of the renewable energy projects.

This was made possible through its 33 years of experience and expert knowledge of its multidisciplinary team of professionals with exposure to overseas training in wind energy and related technology. Through this process, NDB was able to disseminate and share its expertise and know-how to these projects and also to the other fellow financiers who participated in syndicated/co-financed deals. Accordingly, NDB is proud of exchanging the experiences in technical evaluation at a time when the project financing was becoming popular in the banking sector.

NDB's partnership with IFC to enhance renewable energy sector in Sri Lanka NDB entered in to a Risk Sharing agreement in 2010 with International Finance Corporation (IFC), a member of the World Bank group, as yet another initiative to provide larger quantum of debt financing to the Sri Lankan renewable energy sector. Through this risk sharing facility, NDBis now in a position to absorb greater risks in financing renewable energy projects.

This initiative is part of NDB's strategy to participate in country's upcoming renewable energy sector development drive and it facilitates NDB to work towards offering economic benefits for both large as well as small scale local project developers, particularly in wind and hydro power sectors.

While NDB takes pride in partnering with multilateral agencies such as IFC in introducing novel instruments to provide greater support to the renewable energy sector, it also takes pride in paving the avenue for some of the large scale promoters to access direct funding lines through the relationships built up with these multilateral agencies.

Building capacity for future

One of the key contributory factors for NDB's successof active involvement in the renewable energy sector is the expertise and knowhow it accumulated over 3 decades of project financing. This unique strength has enabled NDB to carry out structuring financial packages successfully, appraising projects effectively and efficiently, offering value added services in addition to long term debt funding and monitoring & following up of projects.

Hence, NDB places great emphasis on retaining this expertise and competencies gained over long years and developing them further. In this light, NDB has taken several initiatives in training its qualified, multidisciplinary staff both overseas and locally. With the intention of enhancing the technical evaluation skills of its staff members, NDB took the unprecedented initiative of training some of its members on programmes conducted overseas by countries which possess latest technical knowhow in wind power sector.

NDB with successful engagement in promoting non-conventional renewable energy sector as a financial service provider since late nineties is now gearing itself towards much greater involvement in the sector. Going beyond traditional boundaries of providing straight forward long term finance for the energy sector projects, it now envisages utilizing its competencies gained over years to add value to the sector in a novel way by offering knowledge based services required by the Sri Lankan project promoters.