DOE ties up with UNDP for 3 pilot financing programs

The Department of Energy (DOE) has tied up with the United Nations Development Programme (UNDP) to undertake three pilot financing programs to further promote and accelerate the development and application of renewable energy projects in the country.

Energy Secretary Raphael P.M. Lotilla said the three financing programs namely Project Preparation Fund (PPF), Loan Guarantee Fund (LGF) and the Micro-Finance Fund (MFF) will be funded through grants from the Global Environment Facility (GEF) to the CBRED Project (Capacity Building to Remove Barriers on Renewable Energy Development in the Philippines) being implemented by the UNDP.

Lotilla described the CBRED project as the one that aims to remove the key barriers to renewable development through streamlined and rationalized program, including the setting up of the pilot funds.

The PPF, he said, will be used to assist renewable energy (RE) project developers in paying for the cost of their project activities including feasibility studies, engineering design, securing permits and licensing and loan proposal packaging. This fund will be managed by the Land Bank of the Philippines .

He said the LGF will be used as a partial loan guarantee mechanism for RE projects to spur the development of sustainable energy sources for the Philippines .

This will be available to RE project developers, including retail funders of small RE systems, whose loans may require a high level of securitization or are inadequately capitalized and could not meet the collateral requirements of financial institutions.

The LGU Guarantee Corp., and Banco de Oro-Universal Bank will act as the program manager and escrow agent, respectively, for the LGF.

According to Lotilla, the MFF is a loan financing mechanism for off-grid or small-scale power projects at concessionary rates or long-term financing.

Specifically, it is intended to fund micro-finance intermediaries for re-lending to small scale, including household type of projects in remote, off-grid areas.

The government has been aggressively harnessing the country’s renewable energy potential as strategic measure to address our energy self-sufficiency agenda, given the increasing demand for energy needed to sustain the country’s economic growth.

In collaboration with renewable energy stakeholders, it had advocated for the passage of the RE bill for the past several years now.

The passage of the RE bill is now being pushed by the DOE after it had successfully convinced the lawmakers to enact the Biofules Bill.