Bank of the Philippine Islands, the country’s third-largest bank, signed an agreement with International Finance Corp. for the second phase of a sustainable energy loan program.
BPI president Aurelio Montinola III told reporters yesterday that the bank planned to increase lending to efficient and sustainable energy projects by another P5 billion.
The program, which started last year, aims to develop financing for sustainable energy projects. IFC, the investment arm of the World Bank, estimated sustainable energy financing needs in the Philippines at around $1 billion.
Montinola said BPI’s lending under the IFC facility had reached P1.2 billion and that the bank could expand the lending program by another P5 billion.
The IFC facility aims to help BPI’s clients to cut cost by encouraging them to implement energy-efficient projects. The Philippines has the third-highest power cost in Asia.
BPI initially extended three- to five-year loans to manufacturing companies and mall operators covering 80 percent of the cost of their energy efficiency programs.
Montinola said the interest rates on funds borrowed from the facility could be reduced one-percentage point.
Montinola said talks with IFC now focuses on risk-sharing and an IFC guarantee that would lower further the interest rates on the loan facility.
IFC’s sustainable energy finance program has been existing for 10 years, with the Philippines as the ninth country to sign up.
IFC included the Philippines in the program because of its mature banking market, strong energy price drivers, wide market opportunities and a looming electricity shortage.
IFC advised BPI in the first phase of the agreement on developing sustainable energy financing for clients and helped develop products as well.
IFC said companies embarking on sustainable energy projects by using more energy efficient products and systems could cut cost by 20 percent to 33 percent.
BPI is spending some P100 million in upgrading its facilities to make them more energy efficient. Eileen A. Mencias
