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CASE STUDY 34: COLOMBIA – SUSTAINABLE ENERGY FINANCE PROGRAM

 Barriers               Lack of access to credit, lack of track record in sustainable energy

 Instrument             Portfolio guarantee – pari passu

 Application            Guarantee covering 50% of the potential losses of an energy efficiency/ renewable
                        energy portfolio

 Amount                 US$108 million equivalent (50% covered by the guarantee)


PROJECT BACKGROUND AND OBJECTIVES                           capacity of banks and technical service providers, as well
                                                            as to raise awareness of sustainable energy in the
While Colombia possesses significant potential for
                                                            market.
energy efficiency savings in the industrial, commercial
and residential sectors, increasing sustainable energy      INSTRUMENTS USED
investments confront a number of barriers including:
                                                            The financial mechanism is an unfunded risk sharing
the absence of activities specifically targeted towards
                                                            facility (denominated in local currency). Under this
supporting sustainable energy efforts, and in particular
                                                            mechanism, IFC and IDB will cover 50% of the losses of
the lack of a services market to support companies
                                                            an up to US$108 million portfolio of energy efficiency
interested in using energy more efficiently such as
                                                            and renewable energy loans booked by Bancolombia.
energy service companies; lack of awareness among
private enterprises as to the economic benefits of          INSTITUTIONAL ARRANGEMENTS
sustainable energy; and lack of available financing for
                                                            Under the project, IFC and IDB agree to guarantee
such investments as a result of banks’ perceived risks
                                                            eligible sustainable energy loans originated by
and their lack of capacity and experience with this asset
                                                            Bancolombia. Eligible activities to be supported by the
class.
                                                            project include projects targeting larger SMEs and mid-
This project aims to increase the available funding for     sized industrial companies in energy intensive sectors of
energy efficiency projects in Colombia, through the         industry in Colombia.
provision of a risk sharing facility by IFC and IDB to
                                                            OUTCOMES
Bancolombia, to cover a portion of the losses of a
sustainable energy portfolio and encourage the              The project will support the financing of a US$108
development of its sustainable energy lending business.     million portfolio of sustainable energy projects.
By sharing credit risk in a sustainable energy portfolio,   Moreover, being the first commercial bank entering the
the project will encourage Bancolombia to enter this        sustainable energy finance area in Colombia,
asset class.                                                Bancolombia is expected to have a catalytic effect on
                                                            the industry and will contribute to the mainstreaming of
 This is the first large commercial financing project for
                                                            sustainable energy lending.
sustainable energy finance in Colombia, and is part of
the Clean Technology Fund (CTF) Colombia Sustainable
Energy Finance Program to promote sustainable energy
financing among local banks. The program also includes
an advisory component to help build the internal




1 | R E F I N e www.worldbank.org/energy/refine
Further reading
IFC, BANCOSEF: Summary of Proposed Investment – click here

Climate Investment Funds, Colombia Sustainable Energy Finance Program (C-SEF, the “Program�) – click here




2 | R E F I N e www.worldbank.org/energy/refine