XacBank Signs USD 20 Million Loan Agreement for Energy Efficiency Lending
XacBank and the Global Climate Partnership Fund S.A., SICAV-SIF (“Global Climate Partnership Fund”), managed by Deutsche Bank, have signed a USD 20 million loan agreement with a term of 5 years to provide XacBank with funding to pursue lending for energy efficiency in Mongolia. Forty-five percent of the facility, or USD 9 million, will be allocated for Small and Medium Enterprises (“SMEs”) that produce energy efficient products and 55%, or 11 million, will be lent to clients seeking mortgages to move to residences with lower levels of energy use.
Energy efficiency is a critical issue in Mongolia, where per capita Greenhouse Gas emissions, which contribute to global warming, have increased at a rate almost twice that of other Lower Middle Income countries over the last decade and reached a level 3.3 times as high as its peers in 2009. Furthermore, Ulaanbaatar has been classified as the second most polluted city in the world for particulate matter, which causes up to USD 470 million in health costs per year and contributes to 1 in 10 deaths in the city.
This loan agreement is a landmark step forward in XacBank’s efforts to combat environmental degradation in Mongolia in line with its “People, Planet, Profit” triple bottom line mission and vision. While XacBank has worked in the ger districts to provide consumer loans and distributed energy efficient stoves and ger blankets with international and domestic partners since 2009, this loan marks the first dedicated lending facility for energy efficiency that targets SMEs and mortgages in Mongolia.
SMEs that produce or import energy efficient stoves, insulating ger blankets, improved fuel sources, efficient vacuum-sealed windows, and energy efficient construction materials and insulation will be eligible for the lending facility. Individuals who want to move from the ger districts or old apartment buildings to newer apartments or certified energy efficient houses will be eligible to receive a mortgage from the facility.
The Global Climate Partnership Fund was established in 2009 and provides loans to financial institutions and projects that contribute to a 20% reduction in the emission of carbon dioxide and other greenhouse gases. The Fund’s investors include the German Federal Ministry for the Environment, KfW Development Bank, the International Finance Corporation, and the Danish Government. Mongolia will be the 6th country that the Fund operates in and only the second in Asia.
