Financing a Cleaner Air

Air pollution: our main enemy

• Air pollution attempts against our own sustainability since it is the main factor of environmental risk against our health

Mexico City: A most polluted and populated area

• Mexico City is one of the 10 most polluted cities in the world, in terms of Ozone exposure and PM10 suspended particles, representing a threat to its 20+ million inhabitants, and climate change to the world.

Transportation: the main agressor

• Transportation is the main agressor.

• It consumes 57% of total energy, from gasoline and diesel, contributing to 100% of CO2, 82% of Nox, 62% of PM2.5 and 22% of PM10.

Expansive transportation systems enhance the problem

• The Urban Development pattern, favoring second-floor roads rather than massive transportation systems, has implied an increase of transportation as a main pollutant. In 20 years there has been an increase of 70% in the number of vehicles, from 3 to 5 million.

Government response

• Government response to this threat has been to restrict private vehicles circulation. As a result, 70% of population has increased demand for public transportation, representing a formidable challenge to private providers, since there is no sufficient massive transportation infraestructure.

Mexico city: A big heart

• People suffering the most from this problem are the Base of the Pyramid.

• Mexico City is a big heart. It pumps workers into the center in the mornings, and syphons them to their homes in the sorroundings in the evenings.

• 22 million trips take place into and out of the area every day.

BOP: the usual buffer

• Lack of public transportation is the main problem for the BOP

Lack of financing for decent transportation

• 70% of public transportation vehicles need to be renewed. This means 42,000 vehicles, or an investment of 1,400 million dollars.

Lack of income to pay for financing

• But even if finance was available, the transportation providers have no sufficient income to pay for it.

Financing transportation vehicles: the sustainable way

• At Financiera Sustentable we are providing finance to the transportation service providers in a sustainable way: – 1. We are enhancing their payment capacity by financing only

vehicles consuming vehicular natural gas, costing 40% of the price of Gasolne or Diesel, liberating them the income necessary to pay for the financing of a new vehicle

– 2. By using natural gas, they can circulate every day further improving their income.

– 3. We are providing population at the BOP with better transportation systems.

– 4. Most importantly, the new vehicles are contributing to a better air.– 5. All this in a financing model producing 0% non performing loans

and 40% return on equity to our shareholders in 5 years.

Providing finance

• Service providers are organized in 40+ cooperatives. We went to them to ensure we understood therir cashflows and needs.

• We then created a credit product for them, where they pay for their new vehicles by adding a surplus price per liter of the natural gas consumed everyday.

Enhancing payment capacity

USD equiv. Before After

Gross income 2000 2700

Fuel costs 930 375

Net Income 1070 2325Financing and insurance 200 900

Available income 870 1425

Providing BOP with better transportation systems

A cleaner air

• A natural gas car is the cleanest engine of all fuels, including other alternative fuels. It releases the lowest amount of greenhouse gas emissions. Compared to all other vehicles, natural gas releases 20 percent less carbon dioxide, a main gas responsible for climate change. Looking at total emissions, a natural gas vehicle produces 90 percent less than a gasoline powered car.

CHALLENGES AHEAD.

Financing a cleaner air

• So far we have financed the renovation of 300 vehicles.

• This is less than 1% of what is needed. • To renew the vehicular infraestructure we need

1,400 million dollars.• We will partly finance this by using savings released

to the service providers from the financing scheme• But Institutional investors are needed to speed up

the process

Financing natural gas supply

• Increased demand for natural gas by additional converted vehicles has put a pressure on the available stations.

• For supply of natural gas to meet demand, we need to finance at least 40 new stations, located in strategic places where the cooperatives charge their fuel. This implies the need for 80 million dollars.

• Strategic allocation of service stations will put them up in a profitability path within 24 months, with expected rates of return of 30+ for the investors.

Financing a Cleaner Air

Thank you