Round table on Financing Resource Efficient and Cleaner Production Investments in Small and Medium Sized Enterprises in Georgia and the EaP countries.

1. THE REVIEW OF FINANCIAL INSTRUMENTS FOR
RECP PROJECTS IMPLEMENTATION AT THE SMEs
IN UKRAINE
Ivan Omelchuk
Tbilisi, April 26th 2017

2. Financial instruments
Company Equity
Lending
National and regional SMEs
support programs
Crowdfunding
Climate Innovation Vouchers

3. Dynamics of changes in the cost of energy for SMEs in Ukraine
0
2000
4000
6000
8000
10000
12000
2015 2016 2017
UAHper1000m3The cost of natural gas
0
0,5
1
1,5
2
2,5
2015 2016 2017
UAHper1kW/h
The cost of electricity
Source: http://www.nerc.gov.ua/

4. Dynamics of changes in the level of hryvnia devaluation
Source: http://index.minfin.com.ua/chart/

5. Problems
Lack of sufficient funds
Lack of strategy
Lack of information
High level of bureaucracy

6. Solutions
• Provision of information on financial tools
• Development of the «RECP Action Plan»
• Implementation of «COMFAR»
• Providing information about the
manufacturers and technology
• The development of a solution by the
authorities

7. Dynamics of changes in the number of banks in Ukraine
0
20
40
60
80
100
120
140
160
2014 2015 2016 2017
The number of banks
Source: https://bank.gov.ua/doccatalog/document?id=43633516

8. Review of terms of banking programs, aimed at financing
energy and resource efficiency of SMEs
Characteristics
Loan terms
Interest rate Loan security Special conditionscurrency credit
amount
credit
term
Megabank
Financing energy efficiency projects
Ownership type – private;
less than 250 permanent
employees;
registered according to the
current legislation of Ukraine
UAH
USD
EUR
to 5 m
UAH
to 5
years
depends on credit
amount and
client's
creditworthiness
movable and real
property;
goods for sale;
other liquid assets.
By means of implementing the
approved project not less than
20% savings on energy
consumption and/or reduction of
CO2 emissions should be
reached.
Microcredits for energy saving
Small and medium-sized
enterprises;
less than 100 permanent
employees;
UAH
USD
EUR
to 3 m
UAH
to 5
years
depends on credit
amount and
client's
creditworthiness
movable and real
property;
guaranty of an
individual not engaged
in business;
approval of the spouse
to get a credit.
By means of implementing the
approved project not less than
20% savings on energy
consumption and/or reduction of
CO2 emissions should be
reached.
NEFCO energy efficiency project
Private company;
active in the market for at
least three years;
annual turnover must be at
least three times as much as
the amount of loan;
equity capital must be at least
2.5 times as much as the
amount of loan.
UAH
USD
EUR
to
500 000
EUR
to 4
years
depends on credit
amount and
client's
creditworthiness
Source: http://www.megabank.net/en/energy/

9. Review of terms of banking programs, aimed at financing
energy and resource efficiency of SMEs
Ukreximbank
Credit Program EBRD for SME and mid-caps
less than 250
permanent
employees
UAH
USD
EUR
to 25 m
EUR
depends
on credit
amount
and client's
creditworthi
ness
movable and real property;
goods for sale;
other liquid assets.
-
from 250 to 3000
permanent
employees
from 25 to
50 m
EUR
from 3000 permanent
employees
to 50 m
EUR
Ukrgazbank
Lighting Systems Modernization Program
UAH
to 100 000
UAH
from 3
to 18
months
21,2 %
guaranty of an individual not
engaged in business;
30% energy
savings
Replacement windows program for SMEs
UAH
to 100 000
UAH
from 3
to 12
months
19,5%
guaranty of an individual not
engaged in business;
ECO - LOANS Replacement equipment for SMEs
UAH
USD
EUR
to 70%
market value
equipment
18,5 %
UAH
7,5% USD,
EUR
equipment purchased at the
expense of credit funds
Characteristics
Loan terms
Interest
rate
Loan security
Special
conditions
currency credit
amount
credit
term
Source:
https://www.eximb.com/ukr/sme/loans/eib/
http://www.ukrgasbank.com/financ_eco_proektiv/

10. Problems
High interest rate
Lack of economic tools
Lack of single source of information
Granting credits in foreign currency

11. Dynamics of return of credit funds to the World Bank by
«Chernihivvodokanal»
7,53 7,72 7,92 8,13 8,36 8,60 8,85 9,12 9,40 9,70 10,02 10,35 10,71 11,08 11,48
9,42
15,40
28,16
33,58
34,91 36,13
37,44
38,82
40,27
41,81
43,45
45,18
47,00
48,94
51,01
1,89
7,69
20,24
25,44 26,55 27,54 28,59 29,70 30,87 32,11
33,43
34,83
36,29
37,86
39,52
0
10
20
30
40
50
60
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
MlnUAH
The amount of repayment after a year at the rate as at the date of signing The amount of repayment after a year at the valid for today NBU rate
Difference
Source: https://water.cn.ua/

12. Solutions
• Initiated consideration of the possibility
to development of special credit
products for well-grounded resource-
efficient solutions
• There was provided «Tool of assessing
risk degree and potential of borrowings
in foreign currency»
• There was provided a list of financial
programs with a description of terms of
participation
Tool of assessing risk degree and potential of borrowings
in foreign currency
Source: https://www.efse.lu

13. Review of regional programs to support SMEs operating in
Kharkiv and Chernihiv regions
Source:http://economy.cg.gov.ua/index.php?id=6548&tp=1&pg=
http://kharkivoda.gov.ua/content/documents/824/82383/files/.pdf
Program
Credit
amount
Credit term
Interest
rate
Loan security Priority lines
Regional development
program for small and
medium enterprises of the
Chernihiv region
to 500 000
UAH to 5 years 16 %
movable and
real property;
guaranty of an
individual not
engaged in
business
Implementation of
renewable energy
sources
and energy-
saving
technologies
Regional program of micro-
credit to small and medium-
sized enterprises of Kharkiv
region
to 75 000
UAH
to 1 year
0 %
movable and
real propertyto 200 000
UAH
to 2 years

14. Problems
Small amount of credit
Additional attention of inspection
authorities

15. Solutions
Initiated consideration of possibility to
increase the amount of credit
Initiated consideration of possibility to
attract RECP Clubs experts as
intermediaries between businesses and
the authorities

16. Climate Innovation Vouchers
Applicants Special conditions Сurrency Amount
Climate Technology
Developers
Climate Technology
Users
By means of implementing the
approved project savings on
energy consumption and/or
reduction of CO2 emissions
should be reached.
EUR 20 000 - 50 000
Source: http://innovoucher.com.ua/

17. Company Equity
The lack of sufficient internal resources for
the implementation of RECP options with a
long payback period
Lack of systematic approach to the issues of
financing resource and energy efficiency
measures at the enterprise
Lack of opportunity to get acquainted with
the actual benefits of financial instruments
High level of bureaucracy in coordination of
green projects with the authorities
Provided information on additional financial
instruments for the implementation of RECP options
Carried out incremental strategy of development
for each member of «RECP Club»
(RECP Action Plan)
Formed communicative space between the
participants to exchange information about the actual
benefits from the use of financial instruments
Initiated consideration of issues related to the
bureaucratic burden on SMEs by the authorities

18. Lending
High interest rate of loans offered by local
banks
Lack of economic tools for planning
economic strategy of the enterprise
Lack of single source of information about
existing financial programs for the
implementation of resource and energy
efficiency measures
Providing MFI credits in foreign currency
Initiated consideration of the possibility to
development of special credit products for well-
grounded resource-efficient solutions
Provided «Tool of assessing risk degree and
potential of borrowings in foreign currency»
(EFSE Development Facility)
Provided list of financial programs with description of
participation terms;
Initiated the creation of an information platform for
SMEs and financial institutions
?

19. National and regional SMEs
support programs
Small volume of credit
facilities provided by regional
programs to support SMEs
Additional attention of inspection
authorities with participation in
regional programs of SMEs
support
Initiated consideration of
possibility to increase the
amount of credit
Initiated consideration of possibility
to attract «RECP Clubs» experts
as intermediaries between
businesses and the authorities

20. Crowdfunding
Low popularity of
crowdfunding tool among
companies
Suggested using crowdfunding
to implement image projects in
the sphere of company green
policies distribution

21. Complex solution
RECP Office
Development and
implementation of RECP options
Analysis and attraction of
investments to implement RECP
options
Distribution of image
information on company

22. Thank you for attention!
omelchukivan@gmail.com
https://www.facebook.com/ivan.omelchuk.3