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Development Bank of Jamaica shops for more energy funds

he Government’s business and development financing outfit, the Development Bank of Jamaica (DBJ) is on the hunt for more money to kick-start energy projects.

It is said to be now wrapping up negotiations with the World Bank for an initial US$4.5 million (J$387m) line of credit for energy.

If the deal comes off the ground, it will add to the J$500 million DBJ/PetroCaribe Small and Medium Enterprise (SME) Energy Fund under which energy projects are financed via loans that flow through approved financial institutions.

The World Bank loan is expected to be available for energy projects in all sectors.

“Details and terms are still being finalised, (but) we expect that it will be on very concessionary terms,” said a DBJ spokesperson.

A maximum J$15 million is available to each borrower from the existing J$500 fund, attracting interest of 9.5 per cent. Large enterprises can also obtain funding for energy projects through other DBJ loan windows, of up to J$100 million per borrower at 11 per cent.

The energy financing is being made available as the DBJ ramps up its bid to get businesses to covert to more sustainable and less costly alternatives to oil.

The state bank said it was “particularly keen on seeing more activity in this area of energy efficiency because of the high cost of energy to the country”, especially since borrowers have complained about the high cost of the energy audits.

Repayment period

Loans to SMEs carry a repayment period of up to seven years, including a maximum 12-month moratorium on principal. The J$15 million loan limit represents 90 per cent of the project cost, including the cost of a compulsory energy audit.

The approved financial institutions through which the DBJ money is lent include commercial banks, merchant banks, credit unions, the National People’s Cooperative Bank network, the National Export Import Bank of Jamaica Ltd and microfinance institutions.

The DBJ experience has been a slow take up of energy loans – only two energy-related projects were listed among the 70 financed by the DBJ last year – but increased private sector investment in solar power, and growing complaints from businesses about the high cost of energy, suggest that demand for these loans could strengthen.

Earlier this year, the DBJ blamed the historically low response levels on poor public education, which it vowed to address.

Business enterprises eligible for energy funding include commercial and industrial users of energy, firms which provide energy services to residential and commercial entities, and manufacturers of energy-efficiency equipment and devices.

The funds may be used for retrofitting to accommodate energy efficiency, energy conservation as well as for the development and use of alternative energy.

Source: Jamaica Gleaner

Category/ies:Jamaica News.
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