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Presentation by Exim Bank

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How to finance solar projects

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Presentation by Exim Bank

  1. 1. 1 Export-Import Bank of India and Energy Poverty: How to finance solar projects September 20, 2017
  2. 2. 2  Set up under a Act of Parliament in 1982 by the Government of India (GoI)  Wholly Owned by Government of India  Board of Directors are appointed by GoI: Comprises top officials from key GoI ministries (Commerce & Industry, Finance and External Affairs) and RBI - OBJECTIVES: “… for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade…” “… shall act on business principles with due regard to public interest” (Export-Import Bank of India Act, 1981) Export-Import Bank of India - India’s Export Credit Agency
  3. 3. 33 Exim Bank of India’s Line of Business Funded Portfolio Non-Funded Portfolio Note: (1) As on March 31, 2017 (2) Includes advances under Production Equipment Finance Program, Long Term Working Capital Loan and staff loans. etc. (USD 1.9 bn(1) ) (USD 16.2 bn (1)) Export Credit Products Services Supplier’s/Buyer’s Credit Pre-Shipment Credit Post-Shipment Credit Lines of Credit Guarantees & L/Cs Buyer’s Credit under NEIA Projects Finance for Export Capability Creation Term Loans Export Facilitation Guarantees & L/Cs Working Capital Export Product Development Overseas Investment Finance Import Finance Export Finance 49.89% Loans to Export Oriented Units 24.85% Overseas Investment Finance 15.31% Import Finance 4.98% Export Facilitation 4.10% Others2 0.87% Performance Guarantee 30.89% Advance Payment Gurantee 23.76% Letters of Credit 9.77% Financial Guarantee (Incl. SBLC) 34.12% Retention Money Guarantee 0.65% Bid Bond Guarantee 0.81%
  4. 4. 44  Exim Bank Study on ISA: reveals that for the 121 member countries of this Alliance only 23 countries had 100% percent of their population having access to electricity in 2012, while 54 countries had less than 66% of their population having access to electricity.  Analysis shows that 40 of the 50 ISA member countries in Africa have less than 66% of the electricity, thereby reflecting chronic electricity deficit.  The problem is most acute in East Africa, where only 23% of Kenyans; 18% of Rwandans; and 15.3% of Tanzanians have access to electricity supply.  On the other hand, while access to electricity in countries like Botswana is at 53%, energy production primarily comes from coal and oil, which remains a cause of concern from the sustainability angle.  The International Energy Agency (IEA) estimates that about 585 million people in Sub- Saharan Africa lack access to electricity, with the electrification rate as low as 14.2% in rural areas  Some of the pockets in Africa have been booming, but continued growth and quality of life are being jeopardized by lack of reliable power. Solar Energy Potential
  5. 5. 55 Exim Bank’s Financing Mechanisms for Renewable Energy Projects
  6. 6. 66  The Bank has facilitated various overseas projects in the energy sector which are being executed by Indian companies through the Government of India supported Lines of Credit (LOC) program.  The LOCs have been utilized for solar projects by countries like Mozambique, Suriname, Sudan as also by regional development banks (covering multiple countries) like ECOWAS Bank for Investment and Development (EBID).  Requests received from developing countries  Ministry of External Affairs and Ministry of Finance, Government of India issue approvals.  LOCs operated through Exim Bank LINES OF CREDIT
  7. 7. 7 LOC PROCESS: INITIATION OF THE GOI-LOC PROPOSAL
  8. 8. 8 SIGNING OF AN LOC AGREEMENT
  9. 9. 99 CONTRACT COVERAGE
  10. 10. 10 DISBURSEMENTS & REPAYMENTS
  11. 11. 1111  Ministry of External Affairs have approved earmarking 15-20% of the US$ 10 billion LOC for undertaking solar related projects (in Africa).  Exim Bank with the support of the Government of India, has in the past extended LOCs for financing Solar Projects in some African countries aggregating to US$ 41.08 million where projects have been completed, and projects of US$ 54.44 million in Niger & Nigeria are under execution. Africa 47.9% Asia 49.2% CIS 0.4% LAC 1.8% Oceania 0.8% 209 LOCs 63 countries US$ 15.69 bn (as on end-March 2017) LINES OF CREDIT
  12. 12. 1212  Exim Bank facilitated LOCs have benefitted the recipient countries immensely. For example:  In Mozambique the extended LOC resulted in technology transfer for manufacture of Solar PV Modules based on Solar Cells as raw material. The project has benefitted Mozambique by enabling them to manufacture Solar PV Modules locally and consequently resulted in reduction of import of the same from other countries.  Exim Bank has also funded a solar electrification system (implemented by Central Electronics Ltd) for Khadarab village in Sudan, bringing post-daytime light for the first time into the lives of some 1,500 villagers. The project has been replicated in several other villages. LINES OF CREDIT
  13. 13. 1313 Buyer’s Credit Under National Export Insurance Account (BC-NEIA)  Under the Programme, the Bank extends credit facility to overseas sovereign governments and government owned entities for import of goods and services from India on deferred credit terms.  Facility to cover 85% of contract value. Higher Credit amount may be considered on case to case basis.  Credit period between 8 to 15 years.
  14. 14. 1414 Buyer’s Credit Commercial Financing  Direct assistance by Exim Bank to overseas buyers of Indian goods & services.  Provides non-recourse finance to Indian Exporter by converting the deferred credit contract into cash contract.  Indian supplier do not carry any credit or country risk.  Buyer’s credit finance can be a transaction specific financing or it could be a renewable limit, thereby financing the working capital requirement of overseas company.  As on May 31, 2017, around USD 220 mn is outstanding under the commercial Buyer’s Credit Portfolio.
  15. 15. 15  Equity investment: INR/ FC funding to Indian parent company for its equity/ capital investment in its overseas JV/ WOS;  Indian parent/ promoter loan: INR/ FC loan extended to Indian parent/ promoter to overseas venture  Funding to Overseas Indian Ventures: Foreign currency loans directly extended to the overseas venture of the Indian company for capex, working capital, acquisition etc.  Direct Equity Investment: Direct equity participation in Indian ventures abroad.  As on March 31, 2017, Exim Bank so far provided finance to 587 ventures set up by over 451 companies in 78 countries. Aggregate assistance for overseas investment: `52,913.07 crore Overseas Investment Finance Promoting Overseas Investments/ Acquisition from India – funding options available
  16. 16. 1616 Way Forward in Furthering ISA Initiatives  Continue extension of financial assistance to solar projects in ISA member countries  Assist in implementation of ISA program  Facilitate preparation of Detailed Project Report  Structuring of project  Facilitate interactions amongst stakeholders  Organizing information dissemination programs in select ISA member countries  Designing of training program for personnel  Knowledge management – technology, sharing of information relating to technology, O&M of projects.
  17. 17. 1717  About 55% of the Bank’s gross loan assets are located outside India  71% of Bank’s Gross Loan Assets are Foreign Currency (Non-rupee) assets  Branch in London & Representative Offices in 7 countries Lines of Credit Project Exports Buyer’s Credit Marketing Advisory Servi Overseas Investment Finance Working Capital Direct Equity Investment Overseas Office Geographic Presence
  18. 18. 1818 Thank You Slide 18

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