German Financial Cooperation with India: Goals, Sectors

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German Financial Cooperation with India Goals,
Sectors Links to CDM

• Carbon Bazaar 2009
• April 29, 2009
• Hotel Taj Mahal, New Delhi
• Oskar von Maltzan
• Director
• KfW-Office New Delhi

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We are Part of KfW Bankengruppe.
Promotion of housing,environmental andclimate
protection, education,infrastructure, social
issues
Promotion of SMEs,business founders, start-ups
Promotion of developingand transition countries
International project andexport finance
KfW Carbon Fund
Financing volume in 2008 EUR 4.9 billion
Financing volume in 2008 EUR 33.8 billion
Financing volume in 2008 EUR 14.3 billion
Financing volume in 2008 EUR 17.6 billion
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KfW Entwicklungsbank (KfW development bank).

• On behalf of the German federal government, KfW
  Entwicklungsbank finances investment and advisory
  services in developing countries.
• Goals
• To improve the economic and social situation of
  the people in developing countries in a
  sustainable manner
• To reduce poverty
• To protect natural resources
• Areas of promotion
• Social and economic infrastructure
• Financial systems
• Resource protection
• Besides funds from the German federal budget, KfW
  is increasingly using funds of its own.
• Mostly German Financial Cooperation with
  governments and state institutions in developing
  countries.

4
Financial Cooperation (FC) with India

• India is one of Germanys oldest and largest
  development partners.
• Total commitments by German FC since the late
  1950s amount to nearly Euro 8 billion (INR 54,400
  Crore)
• Ongoing portfolio of about 50 projects,
  equivalent to around Euro 2.5 billion (INR 17,000
  Crore)

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FC with IndiaWhat do we finance?
We finance investments and project-related
advisory services
Protection of the environment and natural
resources
Health care/family planning
Promotion of the financial sector
Energy
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On-going FC Portfolio in India Sector-wise
distribution (EUR 2.5 bn)
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KfW brings in 40 years of experience with Indian
energy sector

• German FC has been Indias partner in the Energy
  Sector for 40 years
• Support to the energy sector with nearly EUR 1.3
  billion German budget
• funds and more than EUR 1 billion of KfWs own
  funds
• Current portfolio and projects under
• preparation appr. EUR 1.5 bn
• (INR 10,200 Crore) of loans / grants
• (for TA)
• Focus shift in recent years to Energy efficiency
  projects for electricity generation and
  distribution and Renewable Energy projects

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Who are the major FC Partners in the Energy
Sector?

• In the past (completed projects)
• Neyveli Lignite Corporation Neyveli mine power
  station
• NTPC Dadri, Singrauli, Farakka, Ramagundam
• State Electricity Boards Korba (Chattisgarh),
  Uran (Maharashtra)
• Our current major partners
• Central Ministries and Departments (MoP, MNRE,
  BEE, CEA)
• National Utilities (NTPC, NEEPCO, DVC)
• State Utilities (APGenco, Mahagenco, WBPDCL,
  Discoms)
• Financial institutions (PFC, REC, IREDA, IIFCL,
  NHB)

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Selected FC Projects in the Energy Sector (1)

• Renewable Energy Programme
• Partner Power Finance Corporation
• Financing Volume EUR 100.6 m loan, EUR 3.3 m
  grant
• Purpose rehabilitation, modernization and
  uprating of 6 hydropower stations in
  Uttarakhand (appr. 500 MW)
• Solar Upgrading of Anta Gas Power Plant
• Partner NTPC
• Financing Volume EUR 100 m loan, EUR 10 m grant
• Purpose upgrading of Anta Gas Power Plant with
  10-15 MW solar energy as complementary
  heat source fuel saver to be integrated with
  steam turbine will be Asias first
  solar-thermal power plant
• Biomass Power Generation
• Partner IREDA
• Financing Volume EUR 20 m loan
• Purpose removal of barriers to biomass power
  generation by financing model investment
  projects that can serve as reference for future
  funding from commercial banks

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Selected FC Projects in the Energy Sector (2)

• Sustainable Energy Programme
• Partner IREDA
• Financing Volume EUR 50 m loan, EUR 1 m grant
• Purpose to promote investments by
  public/private investors in e.g. wind power,
  small hydro, biomass plants, energy efficiency
  in Industry
• MSME Energy Efficiency Programme
• Partner SIDBI
• Financing Volume EUR 50 m loan, EUR 0.5 m grant
• Purpose promoting energy saving related
  investments by MSMEs, thereby
  contributing to energy efficient industrial
  production
• Promotion of Energy Efficient Buildings
• Partner NHB
• Financing Volume EUR 50 m loan, EUR 1.5 m grant
• Purpose finance of investments in energy
  efficient buildings, based on the
  building codes developed by Bureau of Energy
  Efficiency

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German FC in Indias Financial Sector

• Current portfolio
• appr. EUR 0.3 bn (INR 2,040 Crore) of loans /
  grants (for TA)
• Focus Rural Finance SME Finance Microfinance
  Municipal infrastructure finance
• Partners
• SIDBI
• NABARD
• TNUDF

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KfW Carbon Credit FundThe Concept

• Purchase programme for Carbon Credits (JI/CDM)
• KfW concludes purchase contracts for Forward or
  Issued Carbon Credits with Sellers
• payment on delivery, advance payment possible
• up to 2012 with option to extend
• fixed or variable pricing
• KfW acts as a trustee for European Programme
• Participants
• German and European enterprises, who
• want to make use of JI and CDM for compliance
  purposes and
• do not have own access to projects abroad

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KfW Carbon FundOverview of Carbon Programmes

• KfW Carbon Fund
• First tranche of EUR 84 million (closed)
  Participants from Germany, Austria, Luxembourg
  and France
• Equivalent CER volume completely contracted
• EIB-KfW Carbon Programme
• Volume of EUR 100 million (open for Participants)
• For smaller European Compliance Buyers
• Separate Purchase Programme for Belgian
  Government
• Volume of EUR 20 million
• EIB Post 2012 Carbon Fund
• Volume of EUR 125 million
• Co-operation with EIB, CDC, ICO and NIB

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KfW Carbon FundAcquired Projects

• Portfolio (ERPAs and LoIs)
• Total amount21.5 million t CO2e

• Country allocation (credits for KfW Carbon Fund)

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KfW Carbon Fund in India

• KfW Carbon Fund has been active in India since
  2006
• 22 Contracts for purchase of CERs from around 30
  projects concluded
• Appr. 5.2 million tonnes of emission reduction
  certificates purchased from India
• Investments mainly into Renewable Energy (54)
  and Fuel Switch Projects (42 )

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KfW Carbon Fund Project Examples in India
Narayanpur Power Company (Pvt.) Ltd.
Astha Projects Limited
Seagull Power Inc.
Dharmshala Hydro Power Limited
concluded ERPAs
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KfW Carbon FundServices for the Carbon Seller
(1)

• Obligations are backed up by KfW and its AAA
  rating
• Maximum security for the seller
• Enhances the creditworthiness of the CDM project
• Prices offered by KfW Carbon Fund are guaranteed
• Possibility to buy Post-Kyoto emission
  certificates
• Financing support of up to 50,000 for project
  preparation
• Advance Payment on ERPA
• Provide solutions for project financing
• KfW Banking Group has long lasting experience in
  project financing
• KfW Carbon Fund will initiate the contact with
  the relevant financing department within KfW
  Banking Group

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KfW Carbon FundServices for the Carbon Seller
(2)

• Member of European leading Energy Exchanges (ECX
  and EEX)
• Platform to trade issued CERs at market prices
• Expertise in structuring Programmatic CDM
  approaches
• Important areas for pCDM Energy efficiency,
  Renewable Energy
• Transport Sector, Measures in households
• Local Presence and Experience (office in Delhi)
• Network of Indian Partners
• Banks IDBI, SIDBI, SBI
• Cooperation with Consultants

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FC Projects the KfW Carbon Fund (1)

• Potential Synergies
• German FC
• Priority sectors for investments are natural CDM
  candidates (Energy efficiency, Renewable energy,
  Urban Infrastructure, SME projects, Natural
  Resource Management for adaptation projects)
• KfW Carbon Fund
• ¼ of purchased global CER portfolio from India
  main technologies Renewable Energy and fossil
  fuel switch projects
• overlap in terms of
• Country Focus
• Priority sectors / technologies
• Strong synergy potential

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FC Projects the KfW Carbon Fund (2)

• Areas with specific synergy potentials
• FC provides financing solutions and expertise for
  projects that could be eligible for CDM (e.g.
  solid waste, wind energy)
• FC offers a platform for bundling together small
  scale emission reduction activities, e.g. SME
  energy efficiency credit lines (PoA development)
• Raising general awareness of CDM benefits amongst
  project partners
• FC within the projects financed contributes
  to transfer of environmentally friendly
  technologies to India relevant for generating CDM
  CERs
• FC can provide technical assistance for project
  preparation, CDM strategy formulation and
  replication by FC partners
• Partners of FC (e.g. SIDBI, IREDA) are or could
  be partners of the KfW Carbon Fund as well by
  generating/bundling CERs and selling them to
  carbon credit purchasers such as the KfW Carbon
  Fund (MoU)

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FC Projects the KfW Carbon Fund (3)

• However
• while there can be considerable synergies at a
  project level, linkages between the financing
  activities of KfW Development Bank (FC) and the
  KfW Carbon Fund are not mandatory but entirely at
  the discretion of FC partners.
• the main focus of FC is to ensure that
  development priorities of a partner country such
  as economic growth and poverty eradication are
  followed. Carbon credits can only be byproducts
  in FC-financed projects.

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German FC with India Goals, Sectors Links to
CDM

• Thank you for your attention!

Oskar von Maltzan Director India Country
Office KfW Office 21, Jor Bagh New Delhi 110003,
India Tel. [phone] Fax 91 (11)
2464 1203 oskar.maltzan_at_kfw.dehttp//www.kfwindia
.com