1. Unlocking credit opens the door to
clean energy in Asia:
Development Credit Authority
CTI Industry Joint Seminar Kathleen Wu
Beijing, China Office of Development Credit
February 22, 2008 USAID
2. Importance of Credit
Domestic Credit Provided by the Banking Sector
(as a percentage of GDP)
182%
85%
45%
High-income Middle-income Low-Income
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Source: World Bank 2005 World Development Indicators
3. Importance of Credit
Impact of Credit Guarantees
Risk Perception
Collateral Requirements
Longer-term Financing
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4. Guiding Principles
Development Credit Authority (DCA)
• True private sector risk-sharing (50% guarantees)
• Leverage local capital and financial resources
• Demonstration effect & sustainability
• Additionality; Guarantor of Last Resort
• DCA most effective when linked to TA or Policy
Reform
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6. DCA Portfolio
185 guarantees in 54 countries leveraging $1.3B
Other
6%
Hous
14% SME
31%
Infra +
Wtr
13%
Micro
Agri 15%
21% 6
7. Examples of credit support
Increasing Access to Finance
USAID Loan
Portfolio
Guarantee ESCO/
End User
ESCO/
Identified End User
Lender
ESCO/
End User
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8. Examples of credit support
Bond Issuance – System Expansion & Upgrading
Bond Investors
USAID
Funds
Bond
Guarantee
Bonds
Utility
Projects
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9. Examples of credit support
Pooled Loan Facility
Government/
Lender Donor
Grant or
USAID other
Funds
support
Guarantee
Debt Special Purpose Vehicle
Service
(The Special Purpose Vehicle pools government
grants and private funds to on-lend to a group of low
to high creditworthy utilities)
Loan Loan Loan
Utility Utility Utility
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10. Examples of credit support
Pooled Loan Facility
Government/
Lender Donor
Grant or
USAID other
Funds
support
Guarantee
Debt Special Purpose Vehicle
Service
(The Special Purpose Vehicle pools government
grants and private funds to on-lend to a group of low
to high creditworthy utilities)
Loan Loan Loan
Utility Utility Utility
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11. Co-Guarantee Facility – Double the Leverage
Private
USAID 25% Loan
Enterprise
Portfolio Guarantee
Loans Private
Enterprise
Private
All For
Lender(s) Loans
Enterprise
Energy
Private Efficiency
Enterprise Projects
Private
Additional Donor Loans Enterprise
25% Loan Portfolio
Guarantee Private
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Enterprise
12. LPG Example
Loan Portfolio Guarantee in India
India Yes Bank
Partner Bank
Yes Bank
Total Loan
Amount $20 million
USAID variable
Guaranteed guarantee up to 50%
Portion $10 million on loan repayments
Term
10 years
Purpose Facilitate financing to SME SME
small-scale projects and
SMEs in RE, EE, and
water conservation
Private Enterprise
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13. Bulgaria – Energy Efficiency Loan Portfolio Guarantee
Facility Size: US$10 million
Term: 10 years
United Bulgarian
Development Goal: To Bank
promote investment in
energy efficient
technologies at the USAID 50%
municipal level in order to Guarantee
enable municipalities to Loans for energy efficiency purposes
deliver energy in a cleaner,
more cost efficient manner.
Purpose of Guarantee:
To encourage private Private Private
Municipality Municipality
investment in the Enterprise Enterprise
energy sector.
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14. Multi-Bank Example
Cleaner Production and Energy Efficiency LPG
Five Different Banks in Central America
Summary –
BAMER Banco Cuscatlan Bancentro
Facility Size:
US$10 million Banco Cuscatlan de Panama Lafise
• Term: 7 years with
sub-loan tenors
of 2 years. USAID 50%
• Qualifying Projects: Guarantee
Investments designed to Loans for energy Loans for cleaner
efficiency purposes production purposes
encourage the adoption
or expansion of cleaner
production practices or
environmental
management plans Forestry Tourism Agri-
while generating enterprises enterprises businesses
sufficient revenue to
meet operating and debt
service costs 14
15. Contact
DCA: Kathleen Wu
Office of Development Credit
USAID
kwu@usaid.gov
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