Washington, D.C., October 5, 2006
– The IFC-Netherlands Carbon Facility, a joint initiative of the International Finance Corporation, the private sector arm of the World Bank Group, and the Dutch government, today signed an emissions reduction purchase agreement worth more than $6 million. Under this agreement, IFC will use Dutch government funds to purchase greenhouse gas emission reductions from six small hydropower projects in India. In accordance with the Clean Development Mechanism of the Kyoto Protocol, the Dutch government will then use the purchased Certified Emission Reductions, or CERs, to help comply with its commitment under the protocol.
Rachel Kyte, Director of IFC’s Environment and Social Development Department, said, “I welcome this agreement, which will open the door for hydropower projects to access the commercial carbon finance market and improve their returns on risk capital. We hope that it will set an example that can be replicated by similar renewable energy projects across key markets.”
By providing clean electricity to India, the hydropower projects are reducing greenhouse gas emissions under the Kyoto Protocol. The project owners will use the revenues from the sale of CERs to help finance future facilities. CERs are independently verified reductions of carbon dioxide, methane, and other greenhouse gas emissions in developing countries. Under the Clean Development Mechanism, they are eligible for trade and can be sold in countries that have undertaken greenhouse gas emission reductions.
Iyad Malas, IFC’s Director for South Asia, commented, “By enabling these South Asian companies to participate in the carbon credit markets, as well as minimizing key risks associated with the delivery of carbon credits, IFC is helping provide innovative and environmentally and socially sustainable solutions for the private sector, both in India and across the region.”
Dodson-Lindblom Hydro Power Private Limited (DLHPPL) acquired and refurbished the 12 MW Bhandardara 1 hydropower facility in the state of Maharashtra. Ascent Hydro Projects Limited (AHPL) built and operates the 2.2 MW Birsinghpur hydropower facility in the state of Madhya Pradesh, respectively. The two companies are implementing these and several new projects as part of their expansion efforts. In the near term, DLHPPL plans to acquire, rehabilitate, and refurbish Bhandardara 2, a second hydropower facility in the Upper Pravara River basin of 34 MW. In addition, AHPL has three greenfield mini-hydropower facilities totaling 13 MW planned in the state of Himachal Pradesh.
“We are excited about the sale of carbon credits from our projects to IFC as it helps our companies to finance and implement such environmentally friendly projects”, said Mr. V. V. Rajadhyaksha, the Chairman of DLHPPL and AHPL.
DLHPPL and AHPL are owned through subsidiaries by DLI, a US-based engineering firm, and Franklin Park India, a US-based infrastructure investment group.
In addition to the recently signed CER purchase agreement, IFC signed a loan agreement in December 2005 with DLHPPL and AHPL for $17 million to finance its six small hydropower projects.
IFC manages two carbon purchase facilities and offers several financial products for the growing carbon market, including an AAA-rated carbon delivery guarantee on behalf of projects generating emission reductions as well as loans against forward contracts. For more information on IFC’s carbon finance offerings, contact
carbonfinance@ifc.org
.
In India, IFC's current held portfolio is $1.2 billion, making it IFC's second-largest country of operations. IFC is providing direct investment and technical advisory support to promote growth and competitiveness in India. In fiscal 2005 alone, IFC committed $413 million in new investments in the country.
Since 1955, IFC has invested in 210 companies in India, providing nearly $3.5 billion in financing for its own account and $925 million for the accounts of participants in its loan syndication program. India is IFC’s third-largest country of operations, with a held portfolio of $1.26 billion as of July 2006. In recent years, IFC has grown its business in India substantially, with new commitments reaching $402.8 million in fiscal 2006.
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org
.
