Azernews.Az

By Gulgiz Dadashova

The International Finance Corporation (IFC), a member of the World Bank Group, has approved the first loan to Azerbaijan to finance renewable energy and energy efficiency (RE/EE-credit) projects.

The IFC Board of Directors endorsed a loan for Bank Respublika on May 17 to finance energy efficiency and expand lending of alternative energy in small and medium-sized enterprises of the country. The agreement is expected to be signed soon.

With a total project cost of $15 million, IFC will provide $14 million of its own money, and $1 million from Canada Climate Change Program.

The project will extend access to finance for small and medium-sized enterprises and stimulate growth of the non-oil sector in Azerbaijan as well as positively affect job creation and economic development in the country. Moreover, this project will be a positive sign for other commercial lenders and increase the interest of investors to the sectors of renewable energy and energy efficiency in Azerbaijan. It will also help to determine the criteria for financing this sector in the country, IFC said earlier.

Although IFC does not have such lending practices in Azerbaijan, there is an active program on this type of financing for the banks in the South Caucasus and other regions. This is one of the priority lines of IFC as part of the efforts to combat climate change. Hypothetically, all partner banks can apply for RE/EE-loans.

IFC Representative in Azerbaijan Aliya Azimova said earlier that the IFC intends to resume work on raising public and business awareness in the field of energy efficiency.

"A few years ago we conducted a survey to reveal the potential of the energy efficiency market in Azerbaijan. We want to resume work in this direction with a view to raise awareness of people and businesses on this niche. There will be no special project. We will work within a regional initiative," Azimova said.

Azerbaijan became a member of IFC in 1995. Since then IFC has invested almost $393 million and leveraged nearly $73 million from other lenders under 67 projects in financial services, infrastructure, and manufacturing.

IFC has also implemented advisory projects focused on private sector development. In addition, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) has committed $350 million to three funds managed by IFC Asset Management Company that invest alongside IFC in private sector projects in emerging markets.

IFC is the largest global development institution focused exclusively on the private sector. It helps developing countries to achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, IFC investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world's most pressing development challenges.