PRIVATE ENTERPRISE PARTNERSHIP 39542 Partnership P E R S P E C T I V E THE S U M M E R 2 0 0 6 M O N G O L I A IFC Helps Herder Households in Mongolia Obtain Solar Energy Panels through Leasing The International Finance Herder families in remote rural areas of Mongolia have a strong de- Corporation (IFC) is a member of the mand for electricity. IFC's assistance to a new rural finance company World Bank Group. IFC works to has brought electricity within their reach by making solar panels avail- reduce poverty and improve peo- able through leasing. ple's lives in emerging economies by enabling and promoting sustainable Electricity is one of the fundamental needs of isolated herder families in private sector investment at the Mongolia: solar energy panels can provide energy for the radio, TV and frontiers of economic development. other appliances. Herders are particularly interested in receiving IFC itself is the world's largest multi- information on the weather, lateral investor in emerging markets. livestock prices, news and entertainment. Former civil servant, Mr. Ganbold, founded his Who We Are Undrakh company in 2002 to provide such families with IFC's Private Enterprise Partnership access to financial services works to develop strong, self-sus- and products. At the time, taining economies in the former there were only three Soviet Union that serve all levels of commercial banks operat- society. Together with our donor ing in Uliastai, the capital partners, we assist private compa- of the western province of nies and governments to: Zavkhan. · Attract private direct investment to all areas of the economies, continued on page 5 Herder families use solar panels to fulfil basic needs such as cooking · Stimulate the growth of small and medium-sized enterprises, and Mortgages: from "Haute Couture" to Mass · Improve the business enabling Production environment. Countries we serve: Armenia, Interview with Elena Klepikova, PEP Senior Operations Manager, Housing Azerbaijan, Belarus, Georgia, Finance Kazakhstan, Kyrgyz Republic, Russia, Tajikistan, Ukraine, and Why are Housing Finance programs an IFC priority? Uzbekistan. Not long ago, in Russia, the phrase 'residential mortgage loan' was seen only We thank our donor partners for in textbooks. It was nearly impossible to find a bank offering mortgage loans. making our programs possible. No one understood what these were or how to use them to improve housing conditions. All this was at a time when nearly every family in Russia, without exaggeration, needed better accommodation. Such a situation is typical not In This Issue only in Russia, but in any developing country. Accordingly, the formation of a national housing finance system is vital for such countries. pg. 2 Interview with E. Klepikova, PEP An efficient housing finance system enables the majority of people to gain Interview with V. Palatkin, access to better housing and ensures long-term benefits for the whole econ- URALSIB omy. pg. 3 Program Launch: Georgia, Ukraine For this reason, setting up advisory programs to facilitate the formation of national housing finance systems are a World Bank and IFC priority. These pg. 4 Program in Focus: Expanding programs aim, in the long run, to make residential mortgages a common, Access to Finance instrument for improving standards of living. pg. 6 Impact on the Ground: Armenia, continued on page 2 Russia 2 Currently, PEP implements two projects Although the Russian mortgage market has been operational focused on mortgage market development. for some time, mortgage lending is still a small scale busi- In Russia we run a full-scale project while ness. The project aims to consolidate efforts to solve the in Central Asia PEP runs a study to pin- major problems hampering the mortgage industry. The point the elements hampering main accent is on standardization. By creating an easily development and then use its analysis to replicable formula, lending volumes can be raised. The ulti- set out an action plan. The experience mate goal is to allow banks to mass produce mortgages, gained from these two projects could be rather than spending large amounts of time and resources in Elena Klepikova employed in other regions, including individually tailoring each one. Ukraine and the Caucasus. PEP Senior Operations It is important that all key market participants support the Manager, Housing Which mortgage lending developments project's work. As of today, the 'SUPER' Working Group Finance in Russia are, in your opinion, of pri- (Standards and Unification of the Primary Market) com- mary importance at present? prises 74 member-organizations, and this number is constantly growing. The Russian project began a year ago and, since then, we've seen positive developments in the Russian housing finance market. Lend- The project team has gained an excellent reputation for its ing is becoming more common, new players are appearing on the expertise with legislators, experts and market players; this market, mortgage portfolios are increasing and regional expansion is has been greatly beneficial. For example, one of the largest accompanied by a growing range of mortgage products. Interest banks in Russia, URALSIB, is currently employing the rec- rates have fallen slightly but steadily, showing a general positive ten- ommendations laid out in the project's due diligence report. dency. This document is the principle instrument used to encour- age the development of mortgages. On the other hand, it's clear that Russia's mortgage industry, as a branch of the economy, still has some way to go to become estab- It's now vital to preserve the project's reputation, maintain lished. Legislation connected with mortgage lending needs to be put its pace and to disseminate its findings to the market effec- in place and common standards must be applied. Long-term in- tively. vestors, both foreign and Russian, are also required. The ultimate goal for mortgage lending in Russia is to, at The Russian project is working towards making mortgages available least, return to 1913 levels - when the mortgage portfolio to all, transforming them from "haute couture" to "pret-a-porter". accounted for 20% of GDP. "We decided to unite IFC expertise with the potential of URALSIB to provide mortgages." Interview with Vasily Palatkin, Director of the Retail Development We are optimising our mortgage Business Line, the URALSIB Financial Corporation (FC) business and promoting it at new levels, according to international URALSIB is a long-standing partner of IFC. How would you standards. assess your co-operation? IFC recommendations concerning Our business relations began in 2003. At the time, our focus lay in the refinancing of our mortgage financing small and medium sized businesses. As a result of co-op- portfolio have already enabled us eration with IFC, we gained a credit line of $30 million with to optimise our mortgage pack- URALSIB Bank (a component of URALSIB FC) - for financing ages. We aim to ensure customer small business. Vasily Palatkin loyalty while retaining investors' Director of the Retail We were mutually satisfied with the partnership and, in 2005, de- interest in refinancing projects. Development Business cided to unite IFC expertise with the potential of URALSIB to What has already been achieved Line, URALSIB FC provide mortgages. This has been part of a nationwide drive to pro- and what plans are there for the vide affordable housing for the population; fittingly, IFC sees the future? development of housing finance as a top-priority within Russia's fi- nancial sector. To date, IFC has conducted a detailed audit of our mort- gage lending business. We've received qualitative IFC has shared its vast range of worldwide expertise in creating effi- recommendations regarding future development, based on cient mortgage packages and refinancing mortgage loans. We asked trends in Russian mortgage lending, internal and external IFC to help implement these major developments. obstacles and potential gains. URALSIB Bank ranks among the top five Russian banks by prof- We plan to continue working with IFC under the project in itability. We provide services from Kaliningrad to Irkutsk and are order to further develop financing for mortgage deals. IFC second only to Russia's Sberbank as regards our number of branches. will advise us on choosing contractors, creating analytical 2005 was a turning point for our understanding of the potential of facilities for mortgages and the property market and on se- the mortgage market. Our share of the mortgage market reached lecting innovative insurance products. 4.9%, placing us among the four largest mortgage banks in Russia. I believe we are a key partner for IFC and our co-operation How is URALSIB benefitting from the work of IFC's Russia is mutually beneficial. Primary Mortgage Market Development Project? thePartnershipPerspective Summer 2006 ProgramLaunch 3 G E O R G I A IFC Spurs Small and Medium Enterprise Sector Development in Georgia ronment through The official project launch ceremony regular surveys aimed to show the project's strong of business own- presence in Georgia and introduce the ers, as well as IFC team as an asset with an extensive work to facilitate expertise in the field of regulatory and SME access to administrative reforms. About 100 information. guests including government officials, Currently, Geor- business associations, private sector gia has fewer and media representatives attended SMEs per capita the launch to acquaint themselves with than neighboring the project components and identify countries, while avenues for cooperation. growth of small Mikheil Saakashvili, the President of businesses is Georgia, showed strong interest in It is s said that a good beginning is nearly stagnant. Major obstacles to project activities through a special re- half the battle. The Georgia SME Pol- SME development lie in the adminis- quest for additional information. icy Project was successfully launched trative system. According to the survey Vakhtang Lezhava, Deputy State Min- in April 2006. The three-year $1.5 of SMEs conducted by IFC in 2005, ister for reforms, stressed the million project, financed by BP, the lack of transparency in procedures and importance of the project, "Even if an Canadian International Development state requirements were named among inspector does not become a friend Agency (CIDA) and IFC will support key problems by business owners. IFC for business, the fact that inspections the development of Georgia's business will work closely with the Georgian are no longer viewed as a source of environment by assisting the govern- government to improve inspections evil already counts for success of our ment to streamline regulation of the and permits/licenses system by stream- administrative system. I believe the private sector. In addition, the project lining them according to best project will make it." will monitor the local business envi- international practices. U K R A I N E Finland Partners with IFC to Help Develop the Ukrainian Paper Industry To stimulate the growth of Ukraine's pulp and paper industry, IFC recently launched a project to create a Strate- gic Development Plan for the industry. The project is co-funded by the Min- istry of Foreign Affairs of Finland, the Association of Ukrainian Enterprises within the Pulp and Paper Industry ("Ukrpapir"), and IFC trust funds. The plan addresses key private and public sector issues in the pulp and paper industry for the next 15 years to 2020: these include analyses of the technical, financial, and environmental status of the industry, assessment of Celebrating the launch (left to right): Christian Grossmann, PEP Director, Ambassador Laura Reinala, and key issues affecting growth, evaluation Evgeny Lobanov, Chairman of the Presidium of Ukrpapir of new investment opportunities, and identification of regulatory changes velopment since the early 1990s. "We Evgeny Lobanov, Chairman of the needed to improve the investment cli- welcome the opportunity to continue Presidium of Ukrpapir, said that, "Ukr- mate. this co-operation in Ukraine, liaising papir is very keen to implement this At the official project launch cere- with Ukrpapir. Finland has extensive project in co-operation with IFC and mony in Kyiv on 21 March 2006, experience in forestry and its related the government of Finland. It will cre- Finland's Ambassador to Ukraine, Ms. industries. We can share our know- ate a solid foundation from which Laura Reinila, noted that the Finnish how while developing contacts with Ukraine's pulp and paper industry can Ministry of Foreign Affairs has worked Ukrainian counterparts within the sec- grow while attracting more invest- closely with IFC on private sector de- tor," she explained. ment into this strategic sector." PrograminFocus 4 Expanding Access to Finance The Challenge private sector to improve regula- standards, expanding financial mar- Access to finance is crucial to busi- tions and laws governing leasing. kets, and fostering private sector ness development. Yet the financial Develop local expertise by train- development. sector in the countries of Eastern Eu- ing leasing companies and banks To spur the development of mort- rope and Central Asia is still largely to structure leasing transactions, gage lending, we: underdeveloped. Limited access to fi- to assess and manage risks of leas- Work with select banks to imple- nancing remains a major constraint ing operations, and to manage the ment standardized, world-class to the growth of local companies, es- legal, taxation, and accounting as- practices in mortgage origination, pecially for those enterprises that pects of leasing deals. underwriting and servicing; need capital the most - start-ups and Expand the client base for leasing SMEs. Advise and lobby federal and re- by training SMEs to evaluate dif- gional governments to improve IFC's Solution ferent financing options, to work the enabling environment for with leasing companies, to write IFC's Private Enterprise Partnership housing finance; business plans and investment pro- works to build healthy financial mar- posals, and to manage their Deliver trainings and consulta- kets and increase the financial options finances under lease agreements. tions to financial institutions, available to local businesses. Our proj- mortgage-related service providers ects improve the enabling Expanding the Availability of Hous- to encourage industry develop- environment for financial services, ing Finance ment and the adoption of best develop alternative financial prod- practices and standards; ucts, strengthen financial institutions, Results of IFC's work: Conduct public awareness cam- and attract new investment. Uzbekistan: the number of active leas- paigns to improve consumer Catalyzing Leasing Sector Develop- ing market participants doubled, and understanding of the benefits of ment the value of leasing financing grew by housing finance. nearly 400%. Leasing is a critical form of financing Results of IFC's work: for start-up and expanding enter- Azerbaijan: the leasing market has grown from $2.1 million to $30 million, prises, particularly SMEs which Uzbekistan: on June 28, 2006 the Law and investments enabled into the leas- typically lack credit history and col- "On Mortgage", developed by the gov- ing sector through IFC's technical lateral to access bank credit. ernment in cooperation with IFC, passed assistance work, have reached $34.4 through Parliament, and was submit- To build competitive leasing indus- million. ted for presidential approval. tries in the countries of Eastern Russia: IFC's Russia project developed Europe, Central Asia and Mongolia, The development of housing finance a standard mortgage note which is cur- we: has a tremendous developmental im- pact in terms of increasing living rently being tested at partner banks. Work with governments and the In order to develop financial markets in the region, the Parnership also runs select programs in additional ar- eas. Examples include rural finance and microfinance programs in Tajik- istan, and training bank personnel in the Central Asia region. The Partnership expects to expand and deepen its access to finance busi- ness line in the near term. This will be done by rolling our housing fi- nance portfolio out to additional countries, by exporting our successful leasing program model to IFC's tech- nical assistance facilities working in other regions of the world, and by developing additional innovative ad- visory products for the countries of our own region. thePartnershipPerspective Summer 2006 ImpactOntheGround 5 M O N G O L I A IFC Helps Herder Households in Mongolia Obtain Solar Energy Panels through Leasing continued from page 1 Undrakh equipped a model gurt (a to speak on finan- round nomadic tent) with solar energy cial leasing. After panels and leading home appliances. the seminar, Gan- Mr. Ganbold then demonstrated his bold approached model to all 24 soums (municipalities), project staff ask- visiting some of the most remote fam- ing for their advice ilies living in Zavkhan province. on financial leas- Herders were keenly interested but ing. Project few could afford the solar panels. Many promotion mate- approached the company with offers rials, sample of paying in kind or requested that agreements and payment be made in spring, after they'd leasing guidelines sold their cashmere. Very soon, Un- were widely dis- drakh became engaged in barter rather tributed through than being a financial service provider, the province of as it had intended. Zavkhan in re- sponse to multiple High quality solar panels produced in enquiries. These measures attracted 53 new Germany and South Korea are expen- herder clients from 10 out of 24 sive so herders prefer cheaper imports Undrakh company then began municipalities of Zavkhan province. from China. From 2002 to 2003, a to- introducing flexible lease agreements, This resulted in a 250% rise in leases tal of 60 panels were sold by the interest-free terms when payments - worth US $10,427 by the end of company but, in many cases, herders were completed over three months 2005. Ganbold is happy that leasing is failed to pay in full. They began using and a discount at the end of a lease benefitting the herders and his the equipment while postponing pay- when payments were made in a full company. He has provided solar ments. Meanwhile, the cheap and timely manner. Additionally, panels to a school dormitory in one equipment was easily damaged and re- Undrakh introduced additional soum and wind generators to two quired maintenance. By the end of services: maintenance by the company hospitals in other soums. He is now 2004, sales had fallen significantly and, and training and consultancy on enthusiastically planning further in 2004, only two herders applied to assembly, installation and disassembly investments in leasing services. buy the panels. of solar panels (herders move frequently to find better pastures). In June 2005, Mr. Ganbold participated in a seminar for local businesses, organised by the Mongo- A Broader View lian Employer's Federation in Zavkhan province. The IFC Mongolia Leasing Since its launch in 2004, the Mongolia Leasing Development Project has: Development Project had been invited advised the Government of Mongolia on the Law on Financial Leasing and on amend- ments to the Taxation Law. On June 22nd, 2006, Parliament adopted the Law on Financial Leasing, including project recommendations. conducted over 40 training courses in the capital city of Ulaanbaatar and six in provincial capitals and municipalities, educating over 650 private enterprises and financial institu- tions on the advantages of leasing. provided more than 100 hours of consultation to leasing companies regarding improve- ment of terms, risk management and business plans for new start ups. assisted four universities and three training centers in developing courses on financial leasing. These are now included in their syllabus. trained journalists and had materials on leasing published in popular daily newspapers. Additionally, a series of radio spots on leasing have been broadcast on national radio. The project is financed by the Japan-IFC Trust Fund and the IFC Technical Assistance Trust Fund. Solar antenna in Nomrog hospital ImpactOntheGround 6 R U S S I A A Super Mortgage for Russia Russia, with a population of over 140 million, has the largest poten- tial mortgage market in Europe. Yet currently, the market is nowhere near this potential, stand- ing at less than 1% of GDP. Despite strong housing demand from the population and skyrocketing prices, the development of mort- gage lending is hindered by imperfect legislation, lack of uni- fied market standards, and a low level of public awareness about the benefits of mortgages. In summer of 2005 IFC, in coopera- tion with the governments of the summarizes the key terms and con- Activities for partner banks Netherlands and Switzerland, ditions of a mortgage loan. Until IFC is also working with eight part- launched a three year advisory proj- recently each lender had its own ner banks to assist in enhancing their ect to address the key issues hindering form of the Zakladnaya, which mortgage lending procedures. development of the mortgage lend- strongly complicated subsequent Among these banks there are two in- ing industry, the Russia Primary transactions. The standard version vestment clients - Absolut Bank and Mortgage Development Project. can be used as an asset for securi- tization of receivables on mortgage Moscow Credit Bank, as well as Rus- IFC is Russia's largest financier of loans - allowing banks to sell, sia's fourth largest bank - URALSIB. housing finance, with investments pledge or entrust it to other enti- Once these banks introduce best prac- over $250 million. Drawing on its ties, facilitating market liquidity. tices into their operations, this will market knowledge, IFC matched the have a strong demonstration effect advisory project to the current needs NORMA (National Operations on the rest of industry. of the Russian mortgage industry, fo- Reference Manual): a compilation The project is developing standard cusing on three objectives: building of best practices in the Russian tools to address fundamental defi- the mortgage industry and improving mortgage lending industry. The manual can be used by the entire ciencies of the Russian residential the legislative environment, develop- industry as a tool to improve lend- mortgage lending market. ing the capacity of partner banks, and ing policies and procedures. increasing outreach to potential bor- First, the M-LOAN product, which rowers. standardizes the process to be fol- lowed during due diligence assessment "The voice of the industry" "The formation of our group has been a at mortgage banks. The second prod- very important event for the industry, be- IFC established a working group uct created is M-DATA. Designed to cause many key market development issues which brings together all key market improve the lenders' data manage- can really only be solved by uniting our ef- players in mortgage lending in Russia ment practices, this comprehensive forts." - 74 organizations including major set of document templates provide mortgage lenders, international rat- Sergey Dankov, Head of Mortgage information on a mortgage loan, the ing agencies, insurance companies, Lending, Absolut Bank borrower, and the bank's mortgage tax and accounting firms, and other portfolio in a standardized manner. "The working group sessions are very effi- industry stakeholders. cient - they serve to help lenders identify IFC has performed M-LOAN-based The working group consolidates the key issues and develop common positions due diligence review of three banks, efforts of each discrete market partic- on how to address them. The fact that IFC and has a pipeline of three more to ipant, allowing stakeholders to has been able to unite all key market par- be completed in the coming months. develop and then lobby common so- ticipants is extremely important. We've Reviewed banks have begun to im- lutions to the sector's key problems. been recommending the meetings to all plement the project's The group's collaborative efforts have our colleagues." recommendations, such as introduc- brought the following results: Oksana Likhacheva, Head of Retail ing new mortgage loan products and improving internal procedures. Standard Mortgage Note (Zaklad- Department, Moscow Credit Bank naya), a single document which thePartnershipPerspective Summer 2006 ImpactOntheGround 7 R U S S I A gage-related information disclosure to the borrower and is supported by the Federal Antimonopoly Agency, the Central Bank and major Russian bank- ing associations. To educate the media on mortgage re- lated issues and to ensure that the topic is professionally covered, the project regularly holds press events for jour- nalists and conducts a special three-semester academic course on mortgage finance for the students studying Journalism at Moscow State University. "I've been able to broaden my knowledge by attending the mortgage lectures. The lessons on refinancing, security and the structure of the mortgage market were particularly useful to me. I'd like to ex- press my thanks to all involved." Outreach to potential borrowers are drafting the Mortgage Lender's Olga Salobai, student of Moscow State University The IFC project, in cooperation with Code of Ethics, based on best interna- the European Mortgage Association, tional practices. This initiative is the first step toward formalizing mort- A R M E N I A IFC organizes a workshop on corporate governance for Armenian bankers In May 2006, IFC conducted a three- attention: ownership structure, work- need for further improvement. IFC day workshop for top managers and ing practices of the Supervisory and will continue to support Armenian Board members of Armenian banks Management Boards, disclosure and banks in their effort to develop busi- with the support of the Dutch gov- transparency policies and internal ness, as well as to actively invest in ernment and under the auspices of control systems. Armenia's banking sector - IFC's to- the Central Bank of Armenia. The The banks realise that good corpo- tal net commitments in Armenian seminar was devoted to key issues of rate governance will help attract financial markets sector as of June corporate governance in the banking strategic investors, raise funds in cap- 2006 is $8.7 million. sector, such as the role of the Super- ital markets, increase operational visory Board, related party efficiency, minimise credit loss and transactions, risk management and protect all stakeholders' internal control. Experts from the rights. This should then IFC corporate governance cadre were build investor and depositor joined by Dr. Wolfgang Amann from trust. the International Management De- velopment Institute (IMD, Lausanne, Participants agreed that the Switzerland) to discuss these issues security of the banking sys- with 15 Armenian banks. tem shouldn't rely purely on the support of regulatory au- At the event, the IFC team presented thorities and that banks must results of its survey on corporate gov- take responsibility for them- ernance practices in Armenian banks, selves. Strengthening conducted in March-April, 2006. Ar- corporate governance is an menian credit organizations were thus important step and Armen- Gained new insights and ready to implement them: able to identify specific areas needing Ms. Anahit Simonyan, member of the Board of Directors ian banks are aware of the of Armeconombank, Yerevan ImpactOntheGround 8 R U S S I A Russia Sustainable Energy Finance Program Generates First Projects To facilitate investments in energy fit from the program was Center-In- efficiency projects in Russia, IFC vest Bank of Rostov-on-Don, the launched a program combining largest privately owned bank in the technical assistance with dedicated Rostov region. Center-Invest is a long- credit lines for banks. The first $4 standing IFC partner, having received million credit line was fully allo- investments and assistance to improve cated within one month of becoming its management and operations, the available. bank successfully attracted foreign in- Russia consumes ten times more en- vestment, and now has the second ergy per unit of GDP than the U.K. largest retail deposit base in the re- and six times more than Canada. This gion. inefficiency impedes the competitive- Center-Invest's leadership in the area ness of individual companies as well as of energy efficiency is explained by the that of the national economy. management's vision. Vasily Vysokov, Despite growing demand for energy Center-Invest Chairman, says, "En- available in May 2006. IFC's assistance efficient technology, financial institu- ergy prices in Russia are approaching is enabling Center-Invest to extend tions and enterprises' lack of experience world levels so energy efficiency proj- and improve its lending in energy effi- deters them from investing in such ects are becoming increasingly ciency projects. As of July 2006, there projects. To encourage investment in attractive to companies; banks simply are 23 additional projects in the bank's energy efficiency projects, IFC de- need to respond accordingly." pipeline, totaling at least $8.4 million. signed a program combining credit In August 2005, IFC began assisting Among the banks's clients are bak- lines to banks and advisory services to Center-Invest in developing energy ef- eries, factories processing meat and support these investments. ficiency projects. Training events for milk and those producing confec- IFC's program, operating in Moscow, staff and clients were held in Rostov tionary, sunflower oil, machinery, St. Petersburg, Ekaterinburg, Rostov- and Krasnodar and IFC worked with bricks, leather goods and printing and on-Don and Nizhny Novgorod, aims Center-Invest to establish a network of packaging materials. to disburse $20 million over its first energy efficient equipment suppliers. In the other regions, IFC's program year and a total of $100 million within IFC also helped Center-Invest evalu- has helped four partner financial insti- the first three years solely on sustain- ate project proposals for eligibility and tutions develop a pipeline of project able energy projects. feasibility. Eight projects received fi- proposals exceeding $90 million. En- The first financial institution to bene- nancing under IFC's initial $4 million ergy-saving projects assist financial credit line to Center-Invest, made institutions to develop expertise in en- IFC Program Helps Sunflower Oil Producer Turn Waste into Energy ergy efficiency lending and to differentiate themselves from competi- Opt-Trade is one of the 10 largest grain traders in Russia. Opt-Trade also sells bottled vegetable oil. tors. They also positively impact the To expand the vegetable oil business, the company is investing in a new plant for oil production. regional economy as enterprises tap an The plant will generate over 2,000 tons of sunflower husk waste a month as a by-product of its oil important reserve - energy cost reduc- production. Disposal of these husks is a huge problem for the company: to haul this away municipal tions. authorities were requesting $700,000 per year. Another problem is in the cost of gas needed for the The program is funded by Denmark's oil production process: an additional $400,000 per year. Environmental Protection Agency, IFC and Center-Invest specialists helped the company find a solution to both problems: sunflower Finland's Ministry of Foreign Affairs husks will fuel the plant's boilers instead of gas. Acquisition of special boilers, fueled by husks, is fi- and the Ministry of Trade and Indus- nanced by a loan from Center-Invest. try, the Free State of Saxony, the World Bank's Global Environment Facility, Company estimates show that the annual savings will thus exceed $1 million per year. Investments and IFC's Sustainable Financial Mar- of $1.3 million into the new boilers will have a pay back period of about a year. Implementation of kets Facility. the project will also lead to reduction of carbon dioxide emissions of 10,600 tons annually. The Partnership Perspective Editor: Svetlana Pletneva 36 Bldg. 1 Bolshaya 2121 Pennsylvania Avenue, NW is a publication of the IFC's Private Contributors: Alexander Goldin Andrey Milyutin Molchanovka St., 3 rd Floor Washington, DC 20433, USA Enterprise Partnership. Lydia Golikova Dina Nicholas Moscow 121069, Russia Tel.: + 1 (202) 458-0917 Elena Klepikova Svetlana Pletneva Tel.: + 7 (495) 411-7555 Fax.: + 1 (202) 974-4312 www.ifc.org/pep David Lawrence Tamar Razmadze Fax.: + 7 (495) 411-7556 e-mail: ifcpep@ifc.org Ian Luyt Norov Sanjaajamts thePartnershipPerspective Summer 2006