EEP Finance Program

Of: Indonesia Eximbank (IEB) Funding From:

Asian Development Bank (ADB) By: Thomas K. Dreessen, Consulting Team Leader
6 June 2012
1 Email: tkd@epscc.com Mobile :+62 878 7658 5005

IEB/ADB EEP Finance Program

Objective:
IEB to promote and finance Energy Efficiency Products (EEPs) through the development of EE Finance Products and Capacity Building that result in increased implementation of EEPs and reduced GHG emissions in Indonesia.

Design:
ADB is funding: - US$ 30 million Loan to IEB for EE lending - TA Costs for Econoler to develop and implement the EE Finance Program
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Econoler Scope of Work

Develop EE Finance Products that reduce:
Barriers for industrial end-use energy consumers where EEPs are installed (Hosts); Risk & Transaction costs for Local Financial Institutions (LFIs) to finance EEPs.
1. EEP Loan Product Direct loans from IEB 2. EEP Savings Guarantee from insurance company to LFIs, ESCOs, SMEs, Developers & Contractors 3. Host Partial Credit Risk Guarantee (PCG) from IFIs and/or local guarantee companies to LFIs
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EEP Loan Product Features

IEB provides loans to Indonesia export companies who implement EEPs, structured to:
- Not significantly impact Hosts core credit capacity - Have savings from EEPs accepted as primary collateral - Generate a net positive cash flow to Host

International EE Experts provided to develop EEPs: - perform Feasibility Analyses and IGAs - develop structured finance documentation

EEP Savings Guarantee Summary

Objective:
To encourage and reduce risk for LFIs to accept savings from EEPs as the primary source of repayment (and collateral) on the related loans

Design:
Guarantee LFIs that savings from EEPs will be sufficient to pay the principal and interest on the EEP loan (separate from credit risk)

Benefits:
Establishes energy savings as collateral to LFIs Provides a revolving and sustainable structure
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PCG Summary
Objective:
To encourage and reduce risk for LFIs in Indonesia to make the longer-term (7 Year) loans needed to implement comprehensive EEPs

Design:
Provide significant back-year Host repayment risk coverage to LFIs on equal to 50% of the loan amount in years 1-3 and 75% in years 4-7.

Benefits:
Reduces repayment risk LFIs to lend to EEPs for 7year term
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PCG Diagram

EE Finance Program Benefits

To Industrial Hosts:
Limits impact on core business capital and credit capacity through Savings-based Payment Guarantees Provides measured Energy and GHG emission reductions

To SMEs, Equipment Vendors, ESCOs, etc.:

Provides access to LFIs to finance for their EEPs Provides access to global resources for developing EEPs

Equity Investors:
Improves IRRs and reduces Host credit risk
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