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China Utility-Based Energy Efficiency Finance Program (CHUEE)

Bank of Beijing on Board for CHUEE SME and Water Efficiency Programs


 

Bank of Beijing signed a memorandum of understanding with IFC on September 11, 2012 to become the third partner bank for a new phase of the China Utility-Based Energy Efficiency Small and Medium Enterprises (CHUEE SME) program and the first lender to join IFC’s water efficiency program in China.

 

The signing sets out the responsibilities of each party in relation to the two programs and plans for future cooperation. The move is a milestone in IFC and Bank of Beijing’s efforts to address the difficulties faced by smaller Chinese businesses in financing energy efficiency, renewable energy, and water efficiency projects, mainly because they lack assets to serve as collateral.

 

To improve this situation, IFC partnered with Chinese banks to provide a risk-sharing facility that is expected to benefit close to 400 enterprises in their energy efficiency and renewable energy projects in China. Bank of Beijing is the third bank to join the CHUEE SME program, after Industrial Bank and Binhai Rural Commercial Bank. Through the program, IFC will also help Bank of Beijing strengthen its capacity for financing climate-friendly projects.  

 

“Our bank has benefited from our work with IFC and we look forward to continuing this close cooperation for financing energy efficiency and water efficiency projects run by small and medium Chinese enterprises,” said Xu Ningyue, the bank’s vice president.

 

Last year, Bank of Beijing approved loans worth 1.7 billion yuan (about $270 million) for energy efficiency projects in China and won an award for its work. It is seeking to explore financing opportunities for water efficiency projects by joining the IFC program. IFC hopes to replicate CHUEE’s success in supporting energy efficiency projects by showcasing the importance for businesses to save water.

 

Hyun-Chan Cho, IFC’s China and Mongolia country manager, said IFC’s equity investment in Bank of Beijing has borne fruit in improving the lender’s trade finance and corporate governance.

 

“Bank of Beijing is now one of our key strategic global partners," he said. “Our cooperation on the new CHUEE SME and water efficiency programs in China is a significant step in strengthening our partnership.”

 

Rachel Freeman, IFC’s regional business line leader, opened the signing ceremony, which was attended by Bank of Beijing staff and IFC’s global sustainable energy finance specialists.

 

Access to finance is crucial for small and medium Chinese businesses, which make up more than half of China’s gross domestic product. They are inhibited by relatively high credit risks and Chinese banks’ inexperience in financing sustainable energy projects. There is also a lack of understanding of water efficiency projects, which are further hampered by low water tariffs and inconsistent local enforcement for treating industrial wastewater. 

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