Azernews.Az

By Gulgiz Dadashova

The International Finance Corporation (IFC), a member of the World Bank Group, intends to expand the practice of granting loans to banks in Azerbaijan to finance renewable energy and energy efficiency (RE/EE-credit) projects.

IFC Representative in Azerbaijan Aliya Azimova said on Tuesday that the Corporation is ready to accept proposals from banks to start financing projects in the field of renewable energy and energy efficiency.

IFC previously announced that it plans provide a loan to Bank Respublika to begin financing projects in this sector as well as expand lending to small and medium enterprises (SME). The IFC Board of Directors plans to approve a loan to Bank Respublika on May 20. With a total project cost of $15 million, IFC will provide $14 million of its own money, and $1 million from Canada Climate Change Program.

The project will extend access to finance for small and medium-sized enterprises and stimulate growth of the non-oil sector in Azerbaijan as well as positively affect job creation and economic development in the country. Moreover, this project will be a positive sign for other commercial lenders and increase the interest of investors to the sectors of renewable energy and energy efficiency in Azerbaijan. It will also help to determine the criteria for financing this sector in the country, IFC said earlier.

Although IFC does not have such lending practices in Azerbaijan, there is an active program on this type of financing for the banks in the South Caucasus and other regions. This is one of the priority lines of IFC as part of the efforts to combat climate change. Hypothetically,all partner banks can apply for RE/EE-loans.

"There has not been such a product in Azerbaijan," Azimova said. "Theoretically, other banks may also apply with their proposals but to date have not done so."

The European Bank for Reconstruction and Development (EBRD) was the first institution that granted such a loan to Azerbaijan. The $4.2 million loan was allocated in 2013 to AccessBank, in which the EBRD has equity participation. EBRD is also working on a credit line for AccessBank to finance energy efficiency of its customers.

Being the EBRD's first energy efficiency project in Azerbaijan, it is expected to use advanced energy technologies (e.g. efficient HVAC systems, high grade thermal insulation, an energy management system, etc.), setting high standards for sustainable development in the residential and commercial property sectors.

Azimova went on to say that IFC also intends to resume work on raising public and business awareness in the field of energy efficiency.

"A few years ago we conducted a survey to reveal the potential of the energy efficiency market in Azerbaijan. We want to resume work in this direction with a view to raise awareness of people and businesses on this niche. There will be no special project. We will work within a regional initiative," Azimova said.

Azerbaijan became a member of IFC in 1995. Since then IFC has invested almost $393 million and leveraged nearly $73 million from other lenders under 67 projects in financial services, infrastructure, and manufacturing.

IFC has also implemented advisory projects focused on private sector development. In addition, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) has committed $350 million to three funds managed by IFC Asset Management Company that invest alongside IFC in private sector projects in emerging markets.

IFC is the largest global development institution focused exclusively on the private sector. It helps developing countries to achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, IFC investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world's most pressing development challenges.