EE Financing Initiatives of BEE

Report
11th
September 2014
National
Mission on
sustainable
Habitat
National
Mission for
strategic
knowledge
for climate
change
National
Mission for
a "Green
India"
National
Solar
Mission
NAPCC
National
Mission for
sustainable
Agriculture
National
Mission on
Enhanced
Energy
Efficiency
National
Mission for
sustaining
the
Himalayan
Ecosystem
National
Water
mission
Perform,
Achieve and
Trade (PAT)
Market
Transformation
for Energy
Efficiency
(MTEE)
NMEEEFramework for
Energy
Efficiency
Financing
Platform (EEFP)
Energy
Efficiency
Economic
Development
(FEEED)
- PRGFEE - VCFEE
- Public
Procurement Policy
- Fiscal incentives
2

PRGFEE is a risk sharing mechanism to provide commercial banks with a
partial coverage of risk involved in extending loans for energy efficiency
projects. Government of India has approved around Rs. 312 crores for
PRGFEE.

PRGFEE will act as a first-loss and subordinated recovery guarantee

Guarantees a maximum 50% of the loan (only principal). In case of default,
the fund will:
◦ Cover the first loss subject to maximum of 10% of the total guaranteed amount
◦ Cover the remaining default (outstanding principal) amount on pari-passu basis upto
the maximum guaranteed amount


The support under PRGFEE is limited to Government Buildings, Municipalities,
SMEs and industries
The guidelines/rules for operationalization of PRGFEE have been approved in
April 2012. However, during XII Plan it has been advised to slightly change
the operational structure of PRGFEE, and hence, the revision of rules and its
notification is under process.
3
First Loss: 10% of Guaranteed
Amount
Remaining: Pari Passu
FI
5
0
PRGF
2
Defaul
t
FI
2
0
PRGF
Defaul
t
50
Case - II
5
100
20
FI
5+2.5
=7.5
Default
FI
10
2.5
PRGF
Default
50
7.5
PRGF
Case - IV
Case - III
PRGF
Debt
FI
Case - I
5+7.5
=12.5





PFI shall take guarantee from the PRGFEE before disbursement of loan to the borrower.
The Guarantee will not exceed Rs 300 lakhs (proposed for Rs. 1500 lakhs) per project
or 50% of loan amount, whichever is less.
Maximum tenure of the guarantee will be 5 years from the date of issue of the
guarantee
Eligible projects under the PRGFEE, for which Participating Financial Institution (PFI) can
apply for a guarantee, could be credit facilities extended by PFI to ESCO for energy
efficiency projects.
Participating Financial Institutions (PFIs) will be empanelled with BEE. BEE has already
floated an Expression of Interest on 4th June 2014 for empanelment of Participating
Financial Institutions
BEE will select a Public Financial Institution as the Implementing Agency for
implementing all the activities under PRGFEE like approval of proposals and signing of
guarantee agreements, regular monitoring of project and appointment of M&V Agency
for processing guarantee claims, etc.
5



BEE has constituted a Supervisory Committee to provide
guidance as well as monitoring progress in PRGFEE
First meeting of Supervisory Committee (SC) was held on 27th
June 2014, where revised rules of PRGFEE were discussed.
These revised rules of PRGFEE shall be notified by the Ministry
of Power. Operations Manual for PRGFEE is also under review
of SC.
BEE had initiated the process of hiring Implementing Agency
under PRGFEE, which will be a Public Financial Institution
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Bureau of Energy Efficiency
.
(A statutory body under Govt. of India, Ministry of Power)
4th Floor, Sewa Bhawan, R K Puram, New Delhi-110066
Expression of Interest (EOI).
for Empanelment of Participating Financial Institutions (PFIs) under Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE)
Under National Mission for Enhanced Energy Efficiency (NMEEE), Bureau of Energy Efficiency (BEE) has set up
a Partial Risk Guarantee Fund for Energy Efficiency to provide commercial banks with a partial coverage of
risk involved in extending loans for energy efficiency projects.
BEE intends to empanel “Participating Financial Institutions” under PRGFEE for various financial provisions
under PRGFEE. The Agency shall be a Scheduled Nationalized Bank or Systematically Important Non-Bank
Financial Corporation (NBFC –SI), or Infrastructure Finance Companies Non-Bank Financial Corporation
(NBFC-IFC) registered with Reserve Bank of India, Government of India.
This empanelment is an on-going process. The PFI will be empanelled for 5 years from the date of signing of
MoU with BEE or till the time PRGFEE is operational, whichever is earlier. The application for the
empanelment shall be submitted along with relevant enclosures adhering to the format furnished in the EOI
document. Interested bidders may download the EOI document from the website of BEE i.e.
http://www.beeindia.in/
Secretary,
Bureau of Energy Efficiency
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PRGFEE
Fund
Others
GoI
Supervisory
Committee
BEE
Implementing Agency
Documents
Submission
Agreement
Empanelled PFIs
DPR
Loan
ESCO







This project will contribute to the NMEEE initiative of Govt. of India,
and will mobilize and leverage large scale commercial financing for
EE investments.
The total project cost is estimated to be USD 43 million (equivalent
to about Rs. 258 crores)
It will support energy efficiency projects in mid-tier large industries,
MSMEs, street lighting and buildings.
The Guarantee will be Rs.1500 lacs per project or 50% of loan
amount, whichever is minimum.
The maximum tenure of each sub-guarantee supported by PRSF will
be 5 years.
The PRSF shall continue for 15 years, however, it could be extended
till 20 years on the request of SIDBI.
SIDBI has been selected as Project Execution Agency (PEA) by World
Bank and EESL is providing technical support to address broader
Energy Efficient market barriers.
9




This fund is to provide equity capital for energy efficiency projects in
Government buildings and Municipalities in the first phase.
The rules/ guidelines for operationalization of VCFEE have been
approved in April 2012. However, during XII Plan it has been advised
to slightly change the operational structure of VCFEE, and hence, the
revision of rules and its notification is under process.
A single investment by the fund shall not exceed INR 2 crores
Fund shall provide last mile equity support to specific energy
efficiency projects, limited to a maximum of 15% of total equity
required, through Special Purpose Vehicle (SPV) or INR 2 crores,
whichever is less
10





This fund shall be registered with SEBI under SEBI (Alternative
Investment Funds) Regulation, 2012
The Board of Trustees for VCFEE has been constituted
The preparation of documentation and evaluation strategy for
VCFEE is under process
BEE will select a Public Financial Institution as a Fund Manager
for management of the funds of VCFEE and will be primarily
responsible for making investment on behalf of VCFEE
Fund Manager will present the quarterly progress reports to
the Board of Trustees
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Illustration: Total capital requirement for EE Project
EQUITY
VCFEE
4%
Equity: Self & from
other sources
26%
Loan
70%
15% of the
equity is
approximately
4% of the total
capital
requirement
for any EE
project, which
may be
invested under
VCFEE.
12
13



Under Energy Efficiency Financing Platform (EEFP),
BEE has signed MoUs with FIs to create financing
mechanism for making a commercial and
sustainable energy efficiency market
A few training manuals were also developed in
2011 for capacity building of bank staff
It has been planned to organize the capacity
building workshops for FIs in different states
during FY 2014-15.
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For further information, please contact:
Ms. Vineeta Kanwal
Assistant Energy Economist
Bureau of Energy Efficiency
Ministry of Power,
4th Floor, Sewa Bhawan, Sector 1
R. K. Puram, New Delhi -110066
Ph: +91 11 26179699
Fax : +91 11 26178352
Email: [email protected]; [email protected];[email protected]
WEB : www.beeindia.in
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