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ASIA BIOMASS WORKSHOP 2007 BANK PEMBANGUNAN MALAYSIA BERHAD

ASIA BIOMASS WORKSHOP 2007 BANK PEMBANGUNAN MALAYSIA BERHAD FINANCING FOR BIOMASS AND RENEWABLE ENERGY ROJECTS. Agenda. 1)Brief Current Scenario RE in Malaysia Sources of Financing Issues in project financing 2)BPMB - New Role 3)Financing Schemes For RE 4)Concluding Remarks. Why RE?.

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ASIA BIOMASS WORKSHOP 2007 BANK PEMBANGUNAN MALAYSIA BERHAD

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  1. ASIA BIOMASS WORKSHOP 2007 BANK PEMBANGUNAN MALAYSIA BERHAD FINANCING FOR BIOMASS AND RENEWABLE ENERGY ROJECTS

  2. Agenda • 1)Brief Current Scenario • RE in Malaysia • Sources of Financing • Issues in project financing • 2)BPMB - New Role • 3)Financing Schemes For RE • 4)Concluding Remarks

  3. Why RE? • Pressure to shift to alternative sources of energy • Reasons: • Depleting and finite nature of fossil fuels • Dramatic rise in global energy demand brought about by: • population growth • increase in standards of living • big energy appetite of emerging economies • Concern on environment – Kyoto Protocol

  4. RE in Malaysia • Renewable Energy as Fifth Fuel incorporated in the 8th Malaysia Plan (2000-2005) – SREP Program • Only 2 projects came on stream and connected to the grid. – why? • Uncertainty of availability and price of biomass waste • Excess power generation capacity • Tariff considered low • Purely commercial venture • Technology risks • Accessibility of financing

  5. RE in Malaysia • Strategies for alternative energy sources continued in the 9th Malaysia Plan (2006-2010) • Electricity price reviewed • Rise in oil price – reduce dependency • Other sources such as Solar and MSW to be developed • CDM support • Financing issues

  6. Sources of Financing • Debt Financing • Commercial banks • Developmental Financial Institutions (DFI) • Export Credit Agencies (ECA) • Equity Financing • Developer’s own resources • Capital market (IPO) • Investors • Technology supplier

  7. Issues in RE Project Financing What to consider for successful financing: Generation Feedstock Offtake • Availability • Pricing • Transport costs • Fixed price • EPC Contract Proven and Suitable • Technology • Delivery schedule • Realistic costing • Competent technical team • Creditworthiness • Price • Quantity • Price escalation • Duration • Transmission • costs • Reputable contractor • and Technology provider • providing guarantees • Fixed O & M Contract • Long Term • Supply Agreement • Capacity of • supply Strong utility

  8. BPMB – New Role To provide medium to long term financing focusing on the:- infrastructure maritime high technology (including renewable energy from biomass, biodiesel and environmental related projects)

  9. RENEWABLE ENERGY

  10. Financing Schemes • Fund Allocation ; • RM1.0 billion RE/EE Fund • and • RM1.0 billion Biodiesel Scheme

  11. General Eligibility Criteria • Incorporated in Malaysia • Malaysian owned and controlled • (at least 51% Malaysian shareholding) • All existing and new enterprises carrying out or planning to carry out RE&EE projects are eligible • Projects located in Malaysia

  12. Non-Eligibility • Refinancing • Financing of Shares • Taking over existing productive capacity

  13. Mode of Islamic Financing Mode of Islamic Financing Mode of Islamic Financing

  14. RE/EE FUND • Amount : RM1.0 billion allocation • Target Market : Biomass (included oil palm biomass), forest residues, solar thermal, mini hydro, solar PV, municipal waste, rice husk and landfill gas • Tenure : max 10 yrs (include max 2 of grace period) • Profit Charged: Based on Cost of fund + • Max financing amount : RM100m or 85% of project cost whichever is lower

  15. SECURITY • Security is inclusive but not limited to the following:- • Charge on project assets • Assignment of Offtake Agreements or REPPA/FSA, Insurance Policies, Guarantees and all other project agreements • Personal/Corporate Guarantees

  16. BIODIESEL SCHEME • RM1.0 billion (capital market) • Tarket market ; Manufacturing, processing, transportation and infrastructure development of the biofuel industry, which included biofuel plant, manufacturing equipment, transportation, storage and export distribution • Max financing amount : RM100m or 85% of project cost whichever is lower • Profit Charge: Cost of fund + • Tenor : Max. 10 years inclusive 2 years grace period

  17. Concluding Remarks • Renewable Energy shall remain as an important alternative source of energy for the future. But… • Biomass for other applications? • Other sources – mini-hydro, biogas, MSW, solar but need economic feasibility studies • Tariff increased – is it attractive to developers? • Other issues and barriers being addressed in 9MP • - Implementation? • Utility’s role • Financiers appetite • …..are we really up to it??

  18. Thank You Contact Us : Bank Pembangunan Malaysia Berhad Aras 26, Menara Bank Pembangunan Bandar Wawasan No.1016, Jalan Sultan Ismail 50724 Kuala Lumpur Telephone : +603-2611 3133 Fax : +603-2692 8250 Website : www.bpmb.com.my

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