IFC to double investments in RP’s renewable energy projects to $3 billion

MANILA, Philippines – International Finance Corp. (IFC), the private sector investment arm of the World Bank Group, said it will double its portfolio investment for renewable energy projects in the Philippines to $3 billion for 2009 to 2011 from $1.3 billion in 2008.

Jesse Ang, IFC resident representative to the Philippines, said their current portfolio of about $1.3 billion in renewable energy projects would likely be increased to $3 billion in fiscal year 2009.”

Ang said IFC has been aggressively looking at the Philippines as one country in Asia with the most number of business opportunities when it comes to developing RE sources.

“Overall, here in the Philippines, we see tremendous opportunity in the renewable energy space like geothermal hydroelectric power, and wind and biomass,” he said.

“Geothermal – we’re the second largest geothermal user in the world – hydroelectric power, wind energy – as we already have Northwind in the northern coast of Ilocos, and biomass as we’re an agricultural country and a lot of waste products in the agricultural area can be used for biomass,” he added.IFC Philippines launched yesterday its Sustainable Energy Finance Program, funded by the Global Environment Facility or GEF, which works with local financial institutions in assisting private sector investments in renewable energy and energy efficiency projects.

In April this year, the IFC granted a technical grant for a study on sourcing funds for RE projects.

IFC said $5.3-million worth of technical assistance is being proposed to its board.

“This project uses $5.3 million of GEF funds to support advisory services ($2.3 million) and risk sharing ($3 million) for financial institutions,” IFC said.

Specifically, IFC will engage in the Philippine Sustainable Energy Finance Project II which aims to support the creation of a commercial financing market for sustainable energy (SE) projects in the country.

This will also assist the Philippines in improving energy security and economic productivity and promoting private enterprise in the energy sector.

SEF II will cover both energy efficiency (EE) and renewable energy projects.

IFC said this assistance will likewise focus on providing three to four local financial institutions with the support  necessary to develop their own portfolio in SE projects.

billions of pesos have been set aside by the government through the Development Bank of the Philippines and other government financial institutions (GFIs) for RE development.

“The sustainable energy is an advisory program – a knowledge sharing program and then if banks do a lot and want to do more we can do a risk-sharing program. That in itself is an advisory – as banks in the Philippines are quite liquid and we need to help put that money into good use. And in the case of sustainable energy finance we’re doing knowledge sharing and hopefully in the process they can convert those knowledge into loans – particularly for big banks like BPI – they are strong engines of growth if they are able to use their funding,” Ang said.

These funds could be tapped by any individual or entity who would want to engage in RE projects.

But it would be noted that some of the potential investors are still hesitant to tap these funds.

It was believed that with the passage of the RE bill recently, more investors would be willing to take a look at the business opportunities in this area.

For IFC’s part, it said the SEF program is designed to leverage the company’s capabilities and experience and donor resources to address those barriers and will result in improved access to financing for SE projects which will continue beyond the support of IFC financial instruments and technical assistance.

IFC said it expects this assistance to result in growth and business development for private enterprises related to EE/RE projects. –Donnabelle L. Gatdula (The Philippine Star)