Anna Caoleng didn’t think pig farms could produce more than pork and “lechon,” the Philippines’ famous roasted pig dish. But as an account officer for the Sustainable Energy Finance program of the Bank of the Philippine Islands, Caoleng discovered that pig farms are also sources of alternative energy. Methane captured from pig manure can be used to heat, cook and power other things if processed through a biogas system.
With frequent trips to such farms, rice mills, and warehouses that generate or use clean energy, Coaleng found new meaning in her job.
“I’m glad to be helping small entrepreneurs cut down their high electricity bills and improve their profits. I’m doubly happy to know that I’m doing my share in reducing greenhouse gas emissions that harm the environment,” she says.
Bank of the Philippine Islands, known here as BPI, was the first partner of IFC’s Sustainable Energy Finance program, which works with banks to develop financing products for energy efficiency and renewable energy projects, particularly for small and medium enterprises.
In May, IFC welcomed new partner banks: BPI Globe BanKO and China Banking Corporation. BPI Globe BanKO plans to develop microfinance products for clean energy systems for smaller enterprises and lower-income households. “Smaller businesses and lower-income families are actually paying the highest prices for energy. Through the Sustainable Energy Finance program, we can help them conserve energy and access cheaper and environment-friendly sources of power,” says BanKO President Teresita B. Tan.
China Bank aims to develop a stand-alone sustainable energy lending program. IFC will provide assistance in strategy development, market awareness, monitoring and evaluation, training, deal origination, and other areas. “We see the value to our clients of increasing lending in this area as the rising cost of electricity dampens the competitiveness of local businesses,” says Ricardo Chua, China Bank Senior Executive Vice President and Chief Operating Officer.
The Philippines’ largest bank, Banco de Oro Unibank, known as BDO, is also a partner of the program and has a risk-sharing facility with IFC.
BPI’s G-20 Award BPI’s Sustainable Energy Finance program was awarded a $1.2 million grant in May for winning the Group of 20 SME Finance Challenge in 2010. Grants under the competition will now be managed by IFC through the SME Finance Forum, a G-20initiative that is designed to improve access to financial resources for small and medium enterprises.
IFC expanded a risk-sharing facility with BPI, which guarantees 50 percent of every loan under the bank’s Sustainable Energy Finance window, for up to 5 billion pesos ($119 million) of its total portfolio of such loans.
“Our partnership with BPI has been very productive not only in terms of the robust lending pipeline that it has developed but also in raising awareness among entrepreneurs, and demonstrating that lending to energy efficiency and renewable energy projects is potentially a profitable and sustainable business for Philippine banks,” says Serge Devieux, IFC Director of Financial Markets in Asia.
BPI’s Sustainable Energy Finance clients have collectively reduced energy use by 142,000 megawatt hours and generated 208,200 MWh of renewable energy each year. Their projects have also cut greenhouse gas emissions by 527,900 tons annually.