Public Sector Investment Facility and other

private sector instruments by MFA Finland

Janne SykköJanne.sykko@formin.fi Ministry for Foreign Affairs of Finland

EBRD Seminar on Energy Efficiency and

Renewable Energy for Finnish private sector

16.2.2016

Team Finland promotes Finland abroad-MFA’s services as a part of Team Finland

– Team Finland brings together the services the state-financed actors provide.

– MFA provides services such as Market Watch, Access to Officials and Decision Makers, Commercial Diplomacy, Local Events and Communication

– MFA provides also financing for the private sector cooperation to promote sustainable development in the emerging market

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MFA’s Financing Instruments for the Private Sector Cooperation– Use of Instruments are Guided by The Finnish

Government Report on Development Policy, adopted 4th Feb 2016

– Promotes e.g. focus on the rights of women and girls and on the strengthening of the developing countries' own economies.

– The priorities food, water and energy, and the sustainable use of natural resources.

– “The Government will encourage and support responsible Finnish companies who wish to enter the markets of developing countries.”

Financing Instruments are applicable in the following countries

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http://www.finnfund.fi/yritys/fi_FI/map/

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Public Sector Investment Facility (PIF)- Financing Package to the Buyer– PIF is a mixed credit financing facility to support public-

sector investments with significant developmental impacts– The size of the projects usually about 5-30 million euros– For the investments which are not commercially viable but

economically viable in broad terms – Small scale investments under about 2,2 milllion euros,

which can be commercially viable in some cases – The use of the PIF funding can be initiated by the buyer

country government entity or by the interested supplier company

– The projects have to have Finnish content as defined by Finnvera (e.g. utilise the Finnish technology & knowhow)

DRAFT FRAMEWORK

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PIF cont...– Have to be in line with the Finnish development

cooperation policy and with the UN Sustainable Development Goals (SDG)

– Buyer -country government entity does the procurement based on their national procurement rules (direct negotiation / tender)

– Buyer credit provided by the Finnvera approved bank.– MFA grant is about 35% of the total project expences

(project value + buyer’s interest during the loan). – The MFA grant includes the grant element paid in the

beginning of the implementation phase and as an interest subsidy to the buyer’s loan after the project is completed

DRAFT FRAMEWORK

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PIF cont...

– In the current draft rules, the credits could only be granted to Low/Lower-Middle Income Countries but not to LDCs/HIPCs.

– Possible countries are e.g. Vietnam, Kenia, Philippines, Egypt, Ghana, Ukraine, Indonesia etc. (max GDP/ capita USD 4126 (v.2014))

– Project cycle: 1) Concept paper, 2) Feasibility study, 3) Appraisal, 4) Procurement, 5) Final grant approvalby MFA, 6) Implementation and 7) Evaluation of Results.

– More information about the drafting: keo-50@formin.fi – In the future: www.finnvera.fi and www.formin.fi

DRAFT FRAMEWORK

Example of the project which could be financed by the PIF

– ”Upgrade of the Juja Road Electricity Substation Project” will increase the station’s reliability and operational flexibility. The current technology at the station dates from 1952.

– The project will improve the lives of about 800,000 Nairobians living in areas such as Mathare Valley, Kibera and Mukuru and provide more reliable power for hospitals, schools and the industry.

– Contract value: about 24 million euros. Financing arranged between Government of Kenya / National Treasury of Kenya and Nordea Bank Finland Plc

– Buyer: Kenya Power and Lighting Company Limited (KPLC), Supplier: ABB Ltd, Finland. The Finnish content of the project is 51%.

Example of the project which could be financed by the PIF

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Other possible energy projects for PIF

–Rural Electrification–Energy Efficiency–Waste to Energy–Other energy sector investments by the

public sector

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11 BEAM -Business with Impact Programme Developing a new service/ product/ concept

– Beam – Business with Impact programme co-financed by Tekes (The Finnish Funfing Agency for Tech and Innovation) and MFA

– Beam assists Finnish entreprises and other actors in using innovations to address global development challenges

– Normal Tekes financing rules, but focus in the emerging markets / developing countries

– More information: www.tekes.fi/beam

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Finnpartnership –programme Planning to start long term business:– Finnpartnership provides companies and organisations

wide-ranging advisory services and grants. All the services are free of charge.

– The services provided are:– Business Partnership Support for actors who want financial

support for the costs resulting in the initial phase of the project

– Identifying business partners (Matchmaking) for actors who need assistance in seeking out business partners for their project

– planning and financial adviceMore information: www.finnpartnership.fi

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Finnfund Ltd Equity capital, mezzanine financing or long-term investment loans – Finnfund (Finnish Fund for Industrial Cooperation Ltd.) is a

Finnish development finance company that provides long-term risk capital for private projects in developing countries.

– Apart from co-investing with Finnish companies Finnfund can finance ventures that use Finnish technology, cooperate with Finnish partners on a long-term basis or generate major environmental or social benefits.

- More information: www.finnfund.fi

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Other Programmes supported by MFA– The Energy and Environment Partnership (EEP) Programme’s;

projects in all fields of renewable energy, bridging the gap between a good idea and a bankable project by providing part grant financing to project proposals. These projects include various types of feasibility studies, as well as pilot, scale-up and demonstration projects. E.g. www.eepafrica.org and www.eepmekong.org

– Supporting innovation policy and private sector in Southern Africa http://www.saisprogramme.com/) and in Vietnam (http://ipp.vn/ )

– UN Agencies, GEF, Green Climate Fund etc. – EU initiative that will support electrification investments in

developing countries: http://www.electrifi.org/

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15Opportunities with Multilateral Development BanksEvents such as: – ADB’s 11th Clean Energy Forum, June 2016:http://www.adb.org/news/events/asia-clean-energy-forum-2016

-ADB’s 7th Business opportunties fair, March 2016 http://www.adb.org/news/events/7th-adb-business-opportunities-fair-2016

And Programmes such as: – SE4ALL Africa, http://www.se4all-africa.org/– Multi-stakeholder partnership between governments, the private

sector, and civil society; Advisory Board is co-chaired by UN Secretary General and President of the World Bank

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16Opportunities with Multilateral Development Banks: The World Bank/IFC

http://www.worldbank.org/projects/

17The easiest way to start using the Team Finland services is to visit: http://team.finland.fi/en/services

– Team Finland’s service number +358 295 020 510 and / or Team Finland Contact Form

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Thank you.