IFC signs risk-sharing facility with BDO

MANILA, Philippines - The International Finance Corp. (IFC), the private sector investment arm of the World Bank Group, has signed a risk-sharing facility with the Sy-owned Banco de Oro Unibank Inc. (BDO).

In a statement, IFC said the facility aims to encourage private enterprises in the Philippines to invest in sustainable-energy projects and become more profitable, while addressing climate change.

IFC will guarantee up to 50 percent of BDO’s loans for energy-efficiency and renewable-energy projects through the bank’s Sustainable Energy Finance program.

The Philippine government is seeking P1.83 trillion ($40.6 billion) in new investments for the local energy sector to develop not only the country’s fossil fuel and renewable energy sources, but to also boost the growth of other critical sectors.

Of the P1.83 trillion, the biggest chunk of P902.5 billion would be needed to develop the country’s renewable energy sources, which include geothermal, hydro, solar, ocean, wind and biomass. Based on government documents, the Philippines has sufficient geothermal reserves to produce over a thousand megawatts of energy, a high solar power penetration and abundant biomass resources that can produce 235.7 megawatts (MW). The country also has ocean energy potential of 170,000 MW and wind power capacity of 76,600 MW, according to the Department of Energy.

The IFC said the program shows that clean energy combined with energy-efficiency solutions can help companies improve profitability and at the same time help lower greenhouse-gas emissions.

“This is an important agreement for IFC,” Jesse Ang, IFC resident representative for the Philippines, said

Ang said BDO has been very active in supporting energy development projects in the country.

“It will enable BDO to expand its reach, particularly among small and medium enterprises that need financial support to help lower their energy costs and improve competitiveness,” he said.

BDO president Nestor Tan, for its part, said the risk-sharing facility “allows the bank to leverage IFC’s support and global experience to successfully develop the market for sustainable-energy investments.”

IFC and BDO have been partners since 2002.

IFC’s support for the Sustainable Energy Finance program builds on a $150 million equity investment in the bank earlier this year and a $90 million subordinated note investment in 2007.

At present, IFC is the largest global development institution focused on the private sector in developing countries.

“We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development,” IFC said.

In a time of global economic uncertainty, IFC’s new investments climbed to a record $18 billion in fiscal 2010.