Tatarbieva A. D.

North Ossetian State University after K. L. Khetagurova, student

Financing of Russian environmental projects by international financial institutions

Development, implementation and financing of environmental projects at the international level is an important component for the prevention of global environmental problems. The concentration of financial resources to environmental areas as top priority, everything remains as relevant. The funds annually allocated by international financial institutions exceed billion. Along with the funding of environmental funds lending by international financial institutions is one of the ways of financing environmental projects.

Let us consider the credit lines of major multilateral development banks in the field of energy and the environment:

1) European Bank for Reconstruction and Development (EBRD) has the largest portfolio in the field of energy efficiency in region of countries of Eastern Partnership, including Russia. Since 2006, the EBRD uses so called Sustainable Energy Financing Facilities (SEFF). Financing is available on two major directions: energy efficiency (EE) and Small Projects in field Renewable energy (RE). At the end of 2013 the bank signed credit agreement to 422 million euros in Countries of Eastern Partnerships and more to 183 million in Russia and Central Asia. To finance Russian projects in the Energy Saving through the RUSEFF program Bank open credit lines in 150 million to companies and 75 million euros to housing sector. [1]

2) International Finance Corporation (IFC) finances sustainable energy finance in Russia (through the Russia Sustainable Energy Finance Program (RSEFP)) since 2005. The funds are distributed through commercial banks. In July 2012, borrowers in the Russian Federation received more than 242 million US dollars through partner financial institutions, out of which has funded more than 270 projects of small and medium-sized businesses in the field of energy efficiency. [3] Since 2010 the total amount of credit lines for countries in the region (including Russia and Central Asia) in support of sustainable energy and energy efficiency was more than 100 million US dollars; of which 44 million dollars has been agreed with six countries in the Eastern Partnership. [3]

3) The World Bank (IBRD) works primarily with public financial institutions. Finance for environmental purposes tends to be targeted at state owned organisations, and is delivered through government agencies. There are a limited number of examples of the IBRD working with state owned banks to develop environmental credit lines, for example: Russia and Ukraine. Russian Federation and the World Bank are in talks with state-owned Bank of Development and Foreign Economic Affairs (Vnesheconombank (VEB)) for a preferential credit line of 300 million US dollars, supported by the 25 millionth grant from the Global Environment Facility. The funds are intended for the Bank's lending to customers.

4) Nordic Environment Finance Corporation (NEFCO) - an international financial institution established by the five Nordic countries and mainly finances investments and projects in Russia, Ukraine, Latvia, Lithuania, Estonia, Moldova and Belarus NEFCO tends to lend directly through a number of directly operated facilities, rather than through financial institutions and uses a number of mechanisms of direct action. As part of the program "Energy" (12.4 million euros) and "Cleaner Production" (14.8 million euros) NEFCO offers direct financing of projects in the private and public sectors in the Russian Federation, Ukraine and Belarus. Terms of repayment of the debt linked to the performance of investments in relation to energy efficiency and financial savings. Investment fund NEFCO (113 million euros) provides direct support to projects that are beneficial for the environment.

In the past few years from donor development banks Development Bank of Austria (OeEB) operates environmental lending in Russia and the Caucasus. The opening lines of credit have a dual purpose - to support small and medium-sized enterprises and energy efficiency. In addition, Development Bank of Austria participates in the relevant mechanisms in Caucasus, related to the technical advice and the distribution of risk, including the financing of the National Center of pure production of United Nations Environment Programme (UNEP) and United Nations Industrial Development Organization (UNIDO).

Table 1” Overview of participating Russian banks” below provides an overview of the local banks that have worked with International Financial Institutions (IFI) on disbursing environmentally-related credit lines in the countries of Eastern Partnership. IFIs have worked with and extended environmental credit lines to about 70 banks in the region, some of which have contracted more than one credit line. This approach offers capacity-building opportunities to a larger number of local financial institutions. Clearly, Russian and Ukrainian banks make up for about half of these, with Ukreximbank holding the biggest number of IFI-supported credit lines in the region. [4]

Table 1” Overview of participating Russian banks”

	EBRD	IFC	EIB	World Bank	KfW	OeDB	NEFCO	GGF	GCPF
Rosbank	✓
Unicredit	✓		✓
NDB Bank	✓	✓				✓
Bank Center Invest	✓	✓
Bystrobank	✓
Orient Express Bank	✓
Asian Pacific Bank (APB)	✓
Botlease Eurasia	✓
Transcapitalbank (TCB)	✓	✓
Absolutbank		✓
Agropromcredit		✓
CBM		✓
Delta Credit		✓
Independent Leasing		✓
LockoBank		✓
MDM Bank		✓
Prime Finance Bank		✓
Tatfondbank		✓
Ursa Bank		✓
VTB			✓
Raiffeisen Bank			✓
VEB			✓	✓
Sberbank			✓

References:

1. Official Website of EBRD, www.ebrd.com

2. Official Website of IFC, www.ifc.org

3. Page of the Russian Sustainable Energy Financing on the website of IFC (was available 04/28/2015) http://www.ifc.org/wps/wcm/connect/regprojects_ext_content/ifc_external_corporate_site/rsefp_home/achievements/achievements

4. “Environmental lending in EU Eastern Partnership countries”, 2014