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Thursday, 2 October 2014 00:33 - - {{hitsCtrl.values.hits}}
The signing of the loan agreement took place in Rotterdam in the Netherlands on 29 September by NDB Deputy Chairman Ashok Pathirage together with Chief Executive Officer Rajendra Theagarajah.
PROPARCO, a French development finance institution, has allocated a $ 60 m credit line to National Development Bank PLC (NDB), with an additional $ 15 m from its Dutch counterpart, FMO, under a joint facility to support the financing of projects in the renewable energies, agro-industry and water supply sectors.
This financing has been syndicated by PROPARCO and will support the activity of one of Sri Lanka’s largest banks.
This credit line provided by PROPARCO and FMO will finance projects in the renewable energies, agro-industry (particularly tea and rubber plantations) and water supply sectors that require long-term financing, which is in short supply on the local market, and are among the key sectors for the national economic strategy (‘Unstoppable Sri Lanka 2020’).
The support for independent power producers (hydro, wind or biomass) will meet the strong growth in the country’s electricity needs, while limiting its heavy dependence on fossil fuels, which weigh on its budget deficit (oil accounts for 25% of total imports) and its carbon footprint.
In terms of water supply, due to sustained efforts over the past decade, Sri Lanka is one of the first countries in the region to have achieved Goal 7 of the Millennium Development Goals (MDGs). In order to reach universal coverage by 2020, the sector remains a priority for the government, which has launched regulatory reforms with the aim of creating a climate conducive to investments in water supply and sanitation services.
Furthermore, NDB is a pioneer institution in Sri Lanka in terms of promoting best environmental and social (E&S) practices to the private operators it finances.
With FMO’s support, back in 2008 it introduced an E&S risk management system for its counterparties, which it is currently working to improve on, with the technical assistance co-financed by IFC and DEG. Consequently, all the projects supported by NDB will be subject to E&S due diligence, in line with PROPARCO’s and FMO’s requirements in this respect.
“PROPARCO welcomes the signing of this co-financing with FMO to support an institution that is committed to the main areas of sustainable development. With strong growth in Sri Lanka’s financial sector, this financing will contribute to reinforcing the local financial system,” said Marie-Hélène Loison, Deputy CEO in charge of Investments.
“PROPARCO’s financing package is a validation of our country and of NDB’s successful scaling up of its loan portfolio across the country,” said Theagarajah. “The long-term tenor of the syndication enables us to pass on this benefit to our clients.”
NDB was founded in 1979 by the national authorities as the country’s development bank and started developing on the retail market in 2001. It now offers all the services of a universal bank, but retains its DNA as a development bank, which makes it an ideal partner to support projects that contribute to sustainable growth and job creation in Sri Lanka.
NDB enjoys real expertise in financing long-term projects (18% of its portfolio), particularly in the renewable energies sector. Since 1997, it has supported 26 mini-hydro projects and half of the eight Sri Lanka’s wind farms. NDB is also very active in supporting SMEs, for which it has developed a specific range of banking products. Over 3,000 projects were financed in 2013.
PROPARCO is a development finance institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs).
PROPARCO is one of the main bilateral development finance institutions in the world. It invests on four continents encompassing the major emerging countries and the poorest countries, particularly in Africa, and has a high level of requirements in terms of social and environmental responsibility.
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life.
FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food and water. With an investment portfolio of EUR 6.3 billion, FMO is one of the largest European bilateral private sector development banks.
