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| PADGO Sri Lanka GEF Project |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 550586 |
| Company name | INTERNATIONAL FINANCE CORPORATION(IFC) |
| Country | Sri Lanka |
| Sector | Other (For Non-Investment Projects) |
| Environmental category | FI |
| Department | Environment & Social Development |
| Status | Pend Approval-NonInv |
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| Date SPI disclosed | November 30, 2007 |
| Projected board date | January 4, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The objective of the Portfolio Approach to Distributed Generation Opportunities (PADGO) project is to improve access to cleaner and more reliable sources of energy for underserved populations. PADGO seeks to develop a framework under which the various parties (manufacturers, developers, operating companies, banks, rural communities, etc.) are provided tools such as template agreements and contracts, performance standards for equipment, and financing opportunities to encourage entry into the market while maintaining quality of service provided, to lower transaction costs. The framework is designed to be flexible to address the various local constraints and available energy resources to allow for replication in other countries/regions.
The pilot project in Sri Lanka also specifically seeks to support the transition of the power sector from IDA supported mini-hydro generation to development of more diversified small renewable energy sector on commercial basis. The technical assistance and training provided to FIs and project developers are specifically targetted to this objective. |
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| Project sponsor and major shareholders of project company |
| There is no specific project sponsor associated with the project in this IFC-administered technical assistance and risk participation facility. The program and facility will be channeled through the local financial institution (FI)s, which will provide loans from its own sources of funding. We are now in discussion with few FIs in Sri Lanka on participation. |
| Total project cost and amount and nature of IFC's investment |
| The total IFC investment is expected to be in the range of $ 20 – 30 million, including the $ 3 million of Global Environment Facility (GEF) grant funding. Grant funds of approximately $ 2.4 million, funded by GEF, donors and IFC funds, will be used for technical assistance and project administration. |
| Location of project and description of site |
| Sri Lanka was chosen as the country to develop the first pilot project, since the country has been developing renewable energy through the World Bank’s Renewable Energy for Rural Economic Development (RERED) and Energy Sector Development (ESD) initiatives and the electricity grid coverage ratio of 60% represented significant need. The project will continue market development that RERED project initiated. The good understanding and working relationship with the government in the Renewable Energy sector that was fostered during RERED will be utilized to promote the DG concept. |
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| Anticipated development impact of the project |
The PADGO initiative’s anticipated impact is the promotion of Distributed Generation (DG). DG has the potential to be able to address not only the issue of energy access, but also improve reliability of energy supply, improve efficiency of electricity supply, lower pollution through utilization of efficient and/or renewable energy, and increase supply security by diversifying the supply source. The approach will also allow investors to approach investments to energy sector in a modular fashion, instead of large bulk capital investment required under the traditional electricity network model, which lowers the hurdle for new entrants to the electricity market.
The framework and the implementation experience gained in Sri Lanka are meant to inform a second phase of the initiative wherein the framework will be used for scaling-up sustainable lending for DG generation in other countries and regions as potential sources of capital or additional transactions undertaken using the same framework approach. With sufficient experience in structuring, and with sufficient payment history, a diversified portfolio amenable to securitization can be developed. |
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| IFC's expected development contribution |
| The IFC involvement will facilitate the transition to commercially based, sustainable sector development from IDA assisted investments of RERED project. This is critical since IBRD/IDA has been involved in development of Sri Lanka's mini-hydro power sector for over a decade. Their intervention has resulted in about 100MW of mini-hydro capacity in operation or under construction. IFC's intervention seeks to step up commercial risk taking of the sector by local FIs, and also expand on the technology base in the DG arena in Sri Lanka. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal for Risk Sharing Facility portion by Global Financial Markets Department after signing of the mandate letter with the FIs, IFC will further analyze the participating banks' portfolios and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:
- The IFC FI Exclusion List and/or
- The applicable Sri Lankan social and environmental Laws and regulations and/or
- The IFC Performance Standards
IFC will also review, if required, the capacity of the participating banks to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in each participating bank's SEMS.
Based on the review, the participating banks will be required to:
- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that the investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements
Submit a periodic report to IFC as per a format to be provided by IFC |
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| For inquiries about the project, contact: |
As mentioned, there is no specific project sponsor associated with the project in this IFC-administered technical assistance and risk participation facility. Therefore, IFC contacts are provided:
Sandeep Kohli, Senior Project Officer,
Environment and Social Development Department
E-Mail: Skohli@ifc.org, or
Shinya Nishimura, Investment Officer,
Environment and Social Development Department
E-Mail: SNishimura@ifc.org |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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