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IFC backs Industrial Bank on green loans

By Zhang Qi (China Daily)
Updated: 2008-02-26 09:06

The International Financial Corporation (IFC), a member of the World Bank Group, will provide a $100 million risk-sharing facility to the Industrial Bank to support green loans in China.

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Yesterday's deal is the second phase of the IFC's energy efficiency financing program with the Industrial Bank , which will help the Fujian-based bank extend 1.5 billion yuan ($209.79 million)  in green loans to cut five million tons of carbon dioxide emissions a year. That's the equivalent of closing 10 100-MW coal-fired power plants in China.

"The IFC will bear a certain portion of losses for all the loans within the energy efficiency financing portfolio," Jyrki Koskelo, the IFC's vice-president for Africa, global financial markets and funds, said. "The program offers a package of technical assistance on market research, project development and equipment financing services to its partners."

"By establishing partnership and cooperation with the IFC, we now evaluate the project more by cash flow rather than traditional collateral value," Li Renjie, president of Industrial Bank, said. "We will enhance risk analysis to guarantee the success of the project."

"Due to a lack of assets to serve as collateral, we have experienced a lot of frustration when we try to finance a project," Yu Yuanqi, chairman of Shenzhen Phascon Technologies, said. The company is working on a landfill gas recovery and power generation project. "The Industrial Bank didn't look just at our assets as collateral, but helped us to get the capital and grasp the opportunity at a critical time in our company's development."

The IFC and Industrial Bank teamed up on the first phase of the program in 2006.

The IFC initially provided a risk-sharing facility of up to $25 million for the Industrial Bank's green loans. The bank has since financed 46 energy-efficiency and emissions-reduction projects with a total loan value of 900 million yuan.

The majority of these loans are to small and medium-sized enterprises that are implementing energy-efficiency projects such as industrial boiler retrofitting, wasted heat recovery, co- and tri-generation projects for district heating, power saving and optimization of industrial energy use.


(For more biz stories, please visit Industry Updates)



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