Banque du Liban

Financing Unit

2

Environmental Loans: Existing Circular

• Environmentally Friendly projects that aim to preserve the environment, i.e.:

– Green Architecture projects, landscaping, القرميد تلبيس , تركيبحجر

– Renewable energy.– Ecotourism.– Organic Agriculture.– Waste Water Treatment.– Recycling.– Reducing Pollution.

3

Environmental Loans: Existing Circular

CurrencyInterest Rate After Subsidy

Current Interest Value

% of RR

Decrease Term

Subsidized Environmental Loans

LBP≥ Interest on 2Yr. TBs. – 5.15%

0.19%200% - Term Deposits

10 Years

FX≥ 3 Mths. LIBOR / EURIBOR + 0.85%

$1.15%

/ €1.74%

200% - Term Deposits

10 Years

Not Subsidized Environmental Loans

LBP3%100% - RR10 Years

FX≥ Cost of Funds + 2%200% - Term Deposits

10 Years

4

MOU Between BDL and UNDP

Objectives:

• Development of technical cooperation in order to develop a vehicle to finance energy efficiency and renewable energy projects all over Lebanon. This vehicle is called National Energy Efficiency and Renewable Energy Account (NEEREA).

• Cooperation to involve international donors and organizations to support the NEEREA.

• Development of awareness among Lebanese commercial banks and end consumers.

5

MOU Between BDL and UNDP

Roles and Responsibilities of BDL

• Issuing related circulars for the setup of NEEREA.

• Overall financial management and quality control of the operations of NEEREA as per BDL procedures.

• Coordination with the Association of Lebanese Banks to deliver training and capacity building activities.

• Securing the financial stimulus through the exemption from reserve requirements.

6

MOU Between BDL and UNDP

Roles and Responsibilities of UNDP

• Ensure the positive participation of the Ministry of Energy and Water and the Ministry of Finance in the patronage of NEEREA.

• Cooperation with the Ministry of Finance to ensure the financial support needed to cover the collateral of the loans portfolio covered by NEEREA.

• Development of eligibility criteria for potential projects to benefit from the BDL incentive scheme.

• Ensure the technical validation of projects submitted to BDL through the Lebanese Center for Energy Conservation (LCEC).

• Certification of the potential projects submitted to BDL by the LCEC.

7

Grant Contract “Facility in Support of SMEs Energy Saving Investments

• The total amount of the action granted to BDL by the EU is €/12,200,000/ to encourage the investment of energy saving measures aiming to reduce at the same time negative environmental impact .

• If the project is presented within a sector not benefiting from the subsidy foreseen by Circular 80, a subsidy applicable to a loan duration of 10 years and equivalent to 15% of the loan requested.

• If the project is presented within a sector benefiting from the subsidy foreseen by Circular 80, a subsidy applicable to an extension of the loan duration extended by 3 years and equivalent to 5% of the loan requested.

• In addition, out of this € 12,200,000, a provision of € 200,000 will be made for technical assistance.

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Environmental Loans: Draft Circular

• All green and energy saving projects within the Housing, Industrial, Tourism, Agricultural, Health, Education and Service sectors can benefit from the environmental loans whether they seek certification or not.

• Environmental loans will be extended to finance new environmentally friendly projects and to existing projects as well.

• Environmental loans that are not subsidized by the Lebanese Government may be repaid over a period of 10 years.

• Environmental loans that benefit from Government subsidy over a period of 7 years, would benefit from additional incentives in Required Reserve exemptions over the remaining 3 years to final maturity.

• Environmental loans that are guaranteed by Kafalat SAL, under a new scheme funded by the EU, with the following conditions:

– Amount of the Loans guaranteed up to $800,000.– Maturity of the loan is up to 15 years, of which 7 years will be subsidized by the Lebanese

Government, and the remaining period to maturity will benefit from additional incentives provided by BDL.