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Financing Options by Export-Import Bank of India

Financing Options by Export-Import Bank of India. December 08, 2017. SOLAR ENERGY POTENTIAL.

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Financing Options by Export-Import Bank of India

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  1. Financing Options by Export-Import Bank of India December 08, 2017

  2. SOLAR ENERGY POTENTIAL • 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.

  3. SOLAR IN AFRICA: OPPORTUNITY • The installed solar capacity in Africa increased from 23.8 MW in 2000 to 1918.8 MW in 2015 – an increase of more than 80 times. • While the penetration of CSP has gained momentum in Africa since 2010, the primary contribution has been made by solar PV. • Africa has exceptional solar resource that can be harnessed for electricity generation and for thermal applications. • The desert regions of North Africa and some parts of Southern and East Africa enjoy particularly long sunny days with a high intensity of irradiation. • Solar energy can be utilised at various scales, from household and community levels to industrial and national scale operations

  4. Export-Import Bank of India - India’s Export Credit Agency • 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)

  5. Exim Bank of India’s Line of Business Export Credit Finance for Export Capability Creation Funded Portfolio Term Loans (USD 16.2 bn(1)) Projects Products Working Capital Services Export Product Development Lines of Credit Export Facilitation Buyer’s Credit under NEIA Overseas Investment Finance Supplier’s/Buyer’s Credit Pre-Shipment Credit Non-Funded Portfolio Import Finance Post-Shipment Credit (USD 1.9 bn(1) ) Guarantees & L/Cs Guarantees & L/Cs Note: (1) As on March 31, 2017 (2) Includes advances under Production Equipment Finance Program, Long Term Working Capital Loan and staff loans. etc.

  6. EXIM Bank’s Role in Clean Energy Green Bonds • Successfully launched a 5 year Reg S Green Bond issue of US$ 500 mn. • The 1st ever USD-denominated Green bond offering out of India - 1st benchmark-sized Green bond out of Asia in 2015 - and the 3rd ever Green bond issuance out of Asia. EIB Line • EXIM Bank has availed two lines of credit of Euro 100 million and Euro 150 million from EIB for the purpose of financing renewable energy projects. Lines of Credit • 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 amount sanctioned under LOCs for the energy sector exceeds USD 2 billion, of which USD 41 mnof solar energy projects have already been executed. • 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). • Further, solar projects worth around USD 65 million are in pipeline in the African countries of Niger and Nigeria. Others Programs • EXIM Bank has considered several renewable projects under its other programs including OIF-JV and Buyers Credit program

  7. Exim Bank’s Financing Mechanisms for Solar Energy Projects

  8. LINES OF CREDIT • 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

  9. New Guidelines for LOCs • Re-categorisation of countries. • Additional tenor of 5 years and moratorium of 2 years: • For Infrastructure projects costing USD 200 million or more • Projects of strategic importance costing USD 100 million or more • LOC from India to finance the equity of Borrower Government: • In a SPV/ Joint venture for project execution • Contractor / partner to be an Indian entity • Feasibility study and Detailed Project Report [DPR] mandatory. • Appointment of PMC for infrastructure projects mandatory. • Pre-qualification to be done by Exim Bank • List of pre-qualified entities to be provided to LOC recipient Govt • Exim Bank to vet the Tender Documents and the Contract Terms/Agreement • Close monitoring mechanism to ensure completion of projects on time • Quarterly status report on project evaluation • Indian Mission to assist in project monitoring and to obtain Project Completion Report

  10. Terms under GOI - LOCs GOI-LOC Portfolio - As on November 2017

  11. Distribution of GOI-LOCs As on November 2017 Geographic Distribution Sectors Covered

  12. LOC PROCESS: INITIATION OF THE GOI-LOC PROPOSAL

  13. SIGNING OF AN LOC AGREEMENT

  14. CONTRACT COVERAGE

  15. DISBURSEMENTS & REPAYMENTS

  16. LINES OF CREDIT • 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$ 57.44 million in Niger & Nigeria are under execution. 222 LOCs 61 countries US$ 21.41 bn (as at end-Nov 2017)

  17. LINES OF CREDIT • 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.

  18. Success Stories Contract for Solar Electrification executed under the GOI-supported LOC to Government of Sudan • Objectives include (i) spreading technical awareness in rural communities; (ii) limiting migration of high school students to cities • Project covers the following institutions: • 100 primary schools • 100 secondary schools • 100 units of public sector utilities • 100 hospital / health centers in rural areas • 50 voting centers

  19. Success Stories Setting up of Solar Photo Voltaic Modules Manufacturing Plant of 5 MWp/year Capacity executed under the GOI-supported LOC to Government of Mozambique • The project involved Solar Photo Voltaic Modules Manufacturing Plant of 5 MW p/year Capacity. • The project has benefitted Mozambique  by enabling them to manufacture Solar PV Modules locally and resulted in reduction of import of the same from other countries. • The Government of Mozambique will also be able to export the excess production of Solar PV Modules to neighbouring countries.

  20. Success Stories A solar panel Solar panels mounted atop the village health centre Pole mounted solar panel beside a village home • Exim Bank has extended an LOC of USD 27.50 to the Government of Senegal for Rural electrification project. • The project scope also includes Solar Electrification in 62 villages, under which there are total 1,750 solar connections.

  21. Success Stories • Exim Bank has extended an LOC of USD 100 mn to Ecowas Bank for Investment and Development. Under the LOC, a project for Solar Street Lighting in Sierra Leone was financed for USD 20 mn. • The scope of the project involves Supply and installation of solar street light in in various townships of Sierra Leone.

  22. 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.

  23. Buyers Credit under NEIA [BC-NEIA] INTEREST RATES UNDER BC-NEIA Suitable interest differential to be borne by the Project Exporter.

  24. Buyers Credit under NEIA [BC-NEIA] NEIA GUARANTEE FEE Guarantee fee on interest component would be payable at 1% p.a. on an annual basis. At present, a positive list of 85 countries has been identified by ECGC Ltd. for which Indian exporters may avail BC-NEIA facility. TOTAL EXPOSURE The Bank has approved an aggregate amount of USD 2.82 billion for 22 projects, valued at USD 3.02 billion, as on November 30, 2017. The Bank has also given in-principal commitments for supporting 64 Projects with an aggregate amount of USD 7.70 billionnunder BC NEIA.

  25. Government of BC-NEIA Recipient Country Export-Import Bank of India (Exim Bank) BC-NEIA Process: Signing of BC-NEIA Sends draft BC-NEIA Agreement Conveys acceptance Comments/Suggestions Export-Import Bank of India (Exim Bank) Consultation Concurs Government of the BC-NEIA Recipient Country Agreement finalized Agreement is Signed

  26. BC-NEIA Process: Initiation of BC-NEIA Proposal

  27. BC-NEIA Process: Operationalizing of BC-NEIA

  28. BC-NEIA Process : Disbursement and Repayments under BC-NEIA

  29. Buyers Credit under NEIA Country-wise exposure Sector-wise exposure

  30. 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 September 30, 2017, around USD 190 mn is outstanding under the commercial Buyer’s Credit Portfolio.

  31. Overseas Investment Finance Promoting Overseas Investments/ Acquisition from India – funding options available • 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

  32. Overseas Investment Finance Illustrative terms and conditions • Amount: Generally up to 80% of the total requirement. [higher may be allowed in certain cases] • Tenor: 5 to 7 years with maximum 2 year moratorium [May extend beyond 7 years on a case to case basis]. • Currency: INR/FC to Indian Company. • Security - Combination of following : • (i) Charge on assets of Target Company/Indian Company • (ii) Pledge of shares of the target company • (iii)Corporate Guarantee of Indian Parent Company • (iv)Charge on the cash flow of target company • (v)Escrow for receipt of dividend / cash flows • (vi)DSRA mechanism • (viii)Assignment of license/brand etc. • (ix)Any other security permitted by law and acceptable to Exim Bank

  33. Success Stories 5 MW Solar PV Plant implemented by Essel Group in Bijapur (Karnataka) based on Thin film modules under Karnataka State Policy. The offtaker is Hubli Electricity Supply Company Limited (HESCOM) under PPA of 25 years. 20.25 MW Solar PV Plant implemented by Solairedirect (ENGIE Group of France) in Fazilka (Punjab) based on Polycrystalline modules. The offtaker is Punjab State Power Corporation Ltd. (PSPCL) under the PPA of 25 years.

  34. Success Stories 25 MW Solar PV Plant implemented by Louroux Bio Energies (Ajanta Pharma Group) in Surendra Nagar (Gujarat) based on Thin film modules. The offtaker is Gujarat Urja Vikas Nigam Ltd. (GUVNL) under the PPA of 25 years. 17 MW Solar PV Plant implemented by Welspun Renewable in Chitradurga (Karnataka) based on Polycrystalline modules. The offtaker is Mangalore Electricity Supply Company (MESCOM) under the PPA of 25 years.

  35. Success Stories Mundra Solar PV Ltd. (Adani Group): 1.2 GW Solar Cells and Solar Modules manufacturing unit at Mundra SEZ (Gujarat). State-of-the-art manufacturing facility for manufacture of high efficiency Multi-silicon Solar Cells, Mono-PERC Solar Cells and Bifacial Solar Cells. This is by far the biggest facility in India.

  36. 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

  37. Geographic Presence • 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 Adv. Services Overseas Office Overseas Investment Finance Working Capital Direct Equity Investment

  38. Thank You Slide

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