Partial Risk Sharing Facility for Energy Efficiency (PRSF) aims to support India’s Energy Savings Performance Contracting (ESPC) market for Energy Efficient projects. It provides guarantees to the Participating Financial Institutions (PFIs) i.e. Banks/ Financial Institutions/ Non-Banking Financial Company for the Energy Efficiency loans extended by them through Energy Service Companies (ESCOs).
PRSF was launched by the Small Industries Development Bank of India (SIDBI), India’s foremost financial Institution to promote, finance, and develop Micro, Small & Medium Enterprises (MSMEs) in India, with a risk-sharing corpus of US$ 37 million.
EESL empanels financial institutions to access the PRSF fund corpus, and lends to ESCOs or host entities implementing ESPC-based EE projects, based on eligibility criteria.
The project is supported by the World Bank (Project Implementing Entity) the Bureau of Energy Efficiency (BEE), and the Government of India. As the Technical Assistance Executing Agency, Energy Efficiency Services Limited (EESL) works on developing a pan-India pipeline of ESCO projects. SIDBI (Project Executing Agency (PEA) serves as a guarantor to loans given by banks, Participating Financial Institutions (PFIs), Non-Banking Financial Companies (NBFCs) to ESCOs, and ESCO-implemented projects, thereby minimising risk.
The PRSF is funded from the Clean Technology Fund (US$25 million), a Global Environment Facility (GEF) contribution (US$12 million), technical assistance and capacity building component from a GEF component (US$6 million), with US$4 million implemented by SIDBI and US$2 million implemented by Energy Efficiency Services Limited (EESL).
PRSF consists of a risk-sharing facility for energy efficiency, managed by SIDBI, (US$37 million), funded from a Global Environmental Facility (GEF) contribution of US$12 million and backstopped by a Clean Technology Fund (CTF) Guarantee, in the form of contingent finance, of US$25 million, and a technical assistance component.
To be eligible to receive PRSF credit guarantees, PFI loans will have to be for ESCO-implemented Energy efficiency projects. Simultaneously, the Implementing ESCO must undertake an energy savings performance contract (ESPC) with the beneficiary host entity.
The extent of guarantee cover as a proportion to the guaranteed loan is expected to be 40%-75% (the full range initially will be 20% to 75%). Guarantee cover will be calculated on the lowest of the following:
The minimum amount of single guaranteed loan shall be INR 1 million. The maximum amount of loan amount guaranteed shall not exceed INR 150 million. PFIs shall pay to PEA for each energy savings loan, eligible under PRSF, a non-refundable, annual Guarantee Fee at the rate prescribed by PEA from time to time.
The maximum tenure of the guarantee will be 5 years (or such other period as may be decided by PEA) from the date of the first disbursement of the guaranteed loan or till the last date of the operational period of PRSF, whichever is earlier. However, the guarantee tenure shall not exceed the loan tenure.
PRSFEE also enables PFIs through capacity building and technical support. It guarantees up to 75% of loans, from Rs. 1 million to Rs. 150 million to ESCOs and MSMEs for up to five years. A cumulative guarantee exposure of Rs. 450 million is provided to a borrower, enabling execution of multiple projects.
After sanction of a loan by PFIs to eligible ESCO or Host for implementation of EE Projects, the PFI will enter the Guarantee Application details in the PRSF website using the user id & password provided to it by PEA.
PEA shall provide online approval of the guarantee coverage. The guarantee shall come into force from the date of payment of the first installment of guarantee fee to PEA. Further, PFI shall also submit to PEA, for its records, the hard copy of the print-out of the guarantee application duly signed by the Authorised signatory along with the other supporting documents as may be specified by PEA (i.e. Copy of the DPR, copy of the Appraisal Note, Sanction letter, ERMF Compliance certificate, etc.). The guarantee shall apply only to loan amounts disbursed by PFI within a period of 18 months from the date on which the guarantee has been approved.
To know more, please visit PRSF