EE financing initiatives of BEE

11th September 2014

2

Inception of NMEEE

NAPCC

National Solar

Mission National Mission on Enhanced

Energy Efficiency

National Water

mission

National Mission for sustaining

the Himalayan Ecosystem

National Mission for sustainable Agriculture

National Mission for

strategic knowledge for climate

change

National Mission for

a "Green India"

National Mission on sustainable

Habitat

Perform, Achieve and Trade (PAT)

Market Transformation

for Energy Efficiency

(MTEE)

Energy Efficiency Financing

Platform (EEFP)

Framework for Energy

Efficiency Economic

Development (FEEED)

- PRGFEE - VCFEE- Public

Procurement Policy- Fiscal incentives

policy

NMEEE

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.

Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE)

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PRGFEED

ebt

PR

GF

FI

100

50

50

Defa

ult

20 5+7.5=12.5P

RG

FFI 7.5

Case - IV

First Loss: 10% of Guaranteed Amount

Remaining: Pari Passu

Defa

ult 2 2

PR

GF

Case - I

Defa

ult 5 5

PR

GF

Case - II

Defa

ult

10 5+2.5=7.5P

RG

FFI 2.5

Case - III

FI 0 FI 0

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.

Important features of PRGFEE

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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

Important features of PRGFEE….contd.

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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

Advertisement for empanelment of PFIs (4th June 2014)

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Institutional Structure PRGFEE

Fund

Implementing Agency

Supervisory CommitteeBEE

Empanelled PFIs

ESCO

GoIOthers

Documents Submission Agreement

DPR Loan

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.

Partial Risk Sharing Facility (PRSF)

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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

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VENTURE CAPITAL FUND FOR ENERGY EFFICIENCY (VCFEE)

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

Important features of VCFEE

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12

VCFEE4%

Equity: Self & from other sources

26%

Loan70%

Illustration: Total capital requirement for EE Project

EQUITY

15% of the equity is approximately 4% of the total capital require-ment for any EE project, which may be invested under VCFEE.

Governance structure of VCFEE

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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.

Capacity building of Financial Institutions

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For further information, please contact:

Ms. Vineeta KanwalAssistant Energy EconomistBureau of Energy Efficiency

Ministry of Power,4th Floor, Sewa Bhawan, Sector 1R. K. Puram, New Delhi -110066

Ph: +91 11 26179699Fax : +91 11 26178352

Email: vkanwal@beenet.in; pkhanna@beenet.in;prgfee@beenet.in

WEB  : www.beeindia.in