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Export-Import Bank of India and Energy Poverty: How to

finance solar projects

September 20, 2017

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Set up under a Act of Parliament in 1982 by the Government of India (GoI)

Wholly Owned by Government of India

Board of Directors are appointed by GoI: Comprises top officials from key GoI ministries (Commerce & Industry, Finance and External Affairs) and RBI

- OBJECTIVES:

“… for providing financial assistance to exporters and importers, and for functioning as the

principal financial institution for coordinating the working of institutions engaged in financing

export and import of goods and services with a view to promoting the country’s international

trade…”

“… shall act on business principles with due regard to public interest”

(Export-Import Bank of India Act, 1981)

Export-Import Bank of India - India’s Export Credit Agency

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Exim Bank of India’s Line of Business

Funded Portfolio

Non-Funded Portfolio

Note: (1) As on March 31, 2017(2) Includes advances under Production Equipment Finance Program, Long Term Working Capital Loan and staff loans. etc .

(USD 1.9 bn(1) )

(USD 16.2 bn (1))

Export Credit

Products

Services

Supplier’s/Buyer’s Credit

Pre-Shipment Credit

Post-Shipment Credit

Lines of Credit

Guarantees & L/Cs

Buyer’s Credit under NEIA

Projects

Finance for Export Capability Creation

Term Loans

Export Facilitation

Guarantees & L/Cs

Working Capital

Export Product Development

Overseas Investment Finance

Import Finance

Export Finance 49.89%

Loans to Export

Oriented Units

24.85%

Overseas Investment

Finance 15.31%

Import Finance 4.98%

Export Facilitation

4.10%

Others2

0.87%

Performance Guarantee

30.89%

Advance Payment Gurantee

23.76%Letters of

Credit9.77%

Financial Guarantee (Incl. SBLC)

34.12%

Retention Money Guarantee

0.65%

Bid Bond Guarantee

0.81%

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Exim Bank Study on ISA: reveals that for the 121 member countries of this Alliance only 23

countries had 100% percent of their population having access to electricity in 2012, while 54

countries had less than 66% of their population having access to electricity.

Analysis shows that 40 of the 50 ISA member countries in Africa have less than 66% of the

electricity, thereby reflecting chronic electricity deficit.

The problem is most acute in East Africa, where only 23% of Kenyans; 18% of Rwandans; and

15.3% of Tanzanians have access to electricity supply.

On the other hand, while access to electricity in countries like Botswana is at 53%, energy

production primarily comes from coal and oil, which remains a cause of concern from the

sustainability angle.

The International Energy Agency (IEA) estimates that about 585 million people in Sub-

Saharan Africa lack access to electricity, with the electrification rate as low as 14.2% in rural

areas

Some of the pockets in Africa have been booming, but continued growth and quality of life

are being jeopardized by lack of reliable power.

Solar Energy Potential

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Exim Bank’s Financing Mechanisms for Renewable Energy Projects

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The Bank has facilitated various overseas projects in the energy sectorwhich are being executed by Indian companies through the Government ofIndia supported Lines of Credit (LOC) program.

The LOCs have been utilized for solar projects by countries likeMozambique, Suriname, Sudan as also by regional development banks(covering multiple countries) like ECOWAS Bank for Investment andDevelopment (EBID).

Requests received from developing countries

Ministry of External Affairs and Ministry of Finance, Government of Indiaissue approvals.

LOCs operated through Exim Bank

LINES OF CREDIT

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LOC PROCESS: INITIATION OF THE GOI-LOC PROPOSAL

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SIGNING OF AN LOC AGREEMENT

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CONTRACT COVERAGE

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DISBURSEMENTS & REPAYMENTS

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Ministry of External Affairs have approved

earmarking 15-20% of the US$ 10 billion LOC

for undertaking solar related projects (in

Africa).

Exim Bank with the support of the

Government of India, has in the past

extended LOCs for financing Solar Projects

in some African countries aggregating to

US$ 41.08 million where projects have been

completed, and projects of US$ 54.44

million in Niger & Nigeria are under

execution.

Africa47.9%

Asia49.2%

CIS0.4%

LAC1.8%

Oceania0.8%

209 LOCs63 countriesUS$ 15.69 bn

(as on end-March 2017)

LINES OF CREDIT

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Exim Bank facilitated LOCs have benefitted the recipient countries immensely. For example:

In Mozambique the extended LOC resulted in technology transfer for manufacture of Solar PV

Modules based on Solar Cells as raw material. The project has benefitted Mozambique by

enabling them to manufacture Solar PV Modules locally and consequently resulted in reduction

of import of the same from other countries.

Exim Bank has also funded a solar electrification system (implemented by Central Electronics

Ltd) for Khadarab village in Sudan, bringing post-daytime light for the first time into the lives of

some 1,500 villagers. The project has been replicated in several other villages.

LINES OF CREDIT

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Buyer’s Credit Under National Export Insurance Account (BC-NEIA)

Under the Programme, the Bank extends credit facility to

overseas sovereign governments and government owned

entities for import of goods and services from India on

deferred credit terms.

Facility to cover 85% of contract value. Higher Credit

amount may be considered on case to case basis.

Credit period between 8 to 15 years.

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Buyer’s Credit Commercial Financing

Direct assistance by Exim Bank to overseas buyers of Indian goods & services.

Provides non-recourse finance to Indian Exporter by converting the deferred

credit contract into cash contract.

Indian supplier do not carry any credit or country risk.

Buyer’s credit finance can be a transaction specific financing or it could be a

renewable limit, thereby financing the working capital requirement of

overseas company.

As on May 31, 2017, around USD 220 mn is outstanding under the commercial

Buyer’s Credit Portfolio.

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Equity investment: INR/ FC funding to Indian parent company for its equity/capital investment in its overseas JV/ WOS;

Indian parent/ promoter loan: INR/ FC loan extended to Indian parent/promoter to overseas venture

Funding to Overseas Indian Ventures: Foreign currency loans directlyextended to the overseas venture of the Indian company for capex,working capital, acquisition etc.

Direct Equity Investment: Direct equity participation in Indian venturesabroad.

As on March 31, 2017, Exim Bank so far provided finance to 587 ventures setup by over 451 companies in 78 countries. Aggregate assistance foroverseas investment: `52,913.07 crore

Overseas Investment Finance

Promoting Overseas Investments/ Acquisition from India – funding options available

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Way Forward in Furthering ISA Initiatives

Continue extension of financial assistance to solar projects in ISA membercountries

Assist in implementation of ISA program

Facilitate preparation of Detailed Project Report

Structuring of project

Facilitate interactions amongst stakeholders

Organizing information dissemination programs in select ISA membercountries

Designing of training program for personnel

Knowledge management – technology, sharing of information relating totechnology, O&M of projects.

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About 55% of the Bank’s gross loan assets are located outside India

71% of Bank’s Gross Loan Assets are Foreign Currency (Non-rupee) assets

Branch in London & Representative Offices in 7 countries

Lines of Credit Project Exports Buyer’s Credit Marketing Advisory Services

Overseas Investment Finance Working Capital Direct Equity Investment Overseas Office

Geographic Presence

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Thank You Slide

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