IFC and MDM Bank Promote Energy Efficiency Investments in Russia
IFC, a member of the World Bank Group, today signed an advisory services agreement with MDM Bank to establish a new product that supports development of energy efficiency finance. This will include a $20 million credit line to help boost the bank’s energy efficiency lending practices. The credit line is part of a recent $100 million loan that IFC provided to the bank in June 2007.
According to the International Energy Agency, Russia’s overall energy intensity is more than six times that of Canada and 12 times that of the United Kingdom. Increasing demand for energy and rising costs are having a significant impact on profits for Russia’s industrial companies. Inefficient use of energy cuts into their profit margins and makes these companies less competitive in the global marketplace. The owners and managers have started to realize this problem, and their efforts to reduce energy consumption are opening new opportunities for the banking sector.
Russia has high potential for energy efficiency lending. To reduce electricity consumption by 10 percent, industrial enterprises need to invest about $9 billion. Energy efficiency investments are a commercially viable way for Russian enterprises to increase competitiveness and reduce their carbon footprint.
Jyrki Koskelo, IFC Director for Global Financial Markets, said, "We are pleased that one of the leading banks in Russia – MDM Bank – has recognized the opportunity for energy efficiency investments. Closing the energy efficiency gap will benefit the local economy and have a positive impact on the environment.”
Michel Perhirin, Chairman of the Board at MDM Bank, commented, “Energy efficiency finance is a promising market in Russia. With IFC support, the bank will launch a new product for financing such projects. This will help us do more business and help our clients become more profitable. Together we will contribute to reducing carbon emissions in the country"
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