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Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
NATIONAL DEVELOPMENT BANK PLC
Renewable through Financial Intermediaries - Renewable Energy Generation
Date SPI disclosed
August 21, 2009
Projected board date
September 30, 2009
Date revised SPI disclosed
August 24, 2009
Signed: June 23, 2010
Approved: January 5, 2010
The project supports the CES managed PADGO (Portfolio Approach to Distributed Generation Opportunities) project with a risk sharing facility (RSF) to assist local banks increase their exposures to renewable energy (RE) projects. PADGO’s objective is to improve access to cleaner and more reliable sources of energy for underserved populations and is currently piloted in Sri Lanka. The project would help National Development Bank PLC (NDB or the Bank) to:
- free up capital for funding new RE projects, and
- consider loans for RE projects involving technologies new to Sri Lanka (including wind projects).
In addition to the investment project, there is intended to be a comprehensive technical assistance program to support the objectives of the project, which will be focused on the RE sector and participating financial institutions.
Project sponsor and major shareholders of project company
NDB is a private sector bank based in Sri Lanka with presence across Commercial Banking, Project Finance and Retail Banking. The Bank is listed on the Colombo Stock Exchange and shareholding includes institutional and retail shareholders, with no identifiable sponsors. The key shareholder groups in the Bank are Bank of Ceylon (10%); Jaya Investments Limited (10%); Sri Lanka Insurance Corporation Limited (6.35%) and Galleon Diversified Fund Limited (5.82%)
Total project cost and amount and nature of IFC's investment
The project entails a risk sharing facility of IFC that would cover 50% of the risk of existing projects and the additional exposure up to approximately LKR 3.24 billion (approximately $30 m). (The exposure to be covered is being discussed with NDB; but in any event will not exceed LKR 3.24 billion.) The project will help augmenting the Bank’s ability to manage risks on its renewable energy portfolio and to meet its planned growth in the sector.
IFC investment as approved by Board
13.11 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
The Bank is headquartered in Colombo, Sri Lanka and provides services across Sri Lanka through a large network of branches.
Anticipated development impact of the project
Support the construction of additional renewable energy projects in Sri Lanka, including in newer technologies such as wind and biomass;
- Assist SMEs and Corporates who typically implement renewable energy projects in Sri Lanka;
- Help contribute to reducing the reliance on expensive electricity generated from imported oil; and
- Help generate global benefits in the form of greenhouse gas emissions reduction.
IFC's expected development contribution
IFC’s expected development contribution is to:
- Support the Bank’s growth into the renewable sector, especially to the newer technologies;
- Build capacity in the Bank in relation to evaluating and managing risks;
- Support best practices in the Bank.
Environmental and social issues - Category FI
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze the activities proposed to be supported with IFC financing for types of transactions, size, tenor and RE sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:-
- The IFC FI Exclusion List; and/or
- The applicable Sri Lankan social and environmental Laws and regulations; and/or
- The IFC Performance Standards.
Although an existing client, IFC will review the capacity of the bank to manage social and environmental risks and to establish and maintain an Environmental & Social Management System (ESMS) in the context of this investment. If required, IFC will suggest Supplemental Actions to address any gaps in the bank's ESMS. IFC will also review the Bank's HR & labor practices according to IFC's Performance Standard 2: Labor and Working Conditions and will also be suggesting supplemental actions in this context, if necessary.
Based on the review, the participating banks will be required to:
- Develop an, or upgrade, if necessary, any existing ESMS, prior to commitment to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the ESMS;
- Commit to implement the ESMS, to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements;
- Revise, if necessary, existing labor policies and practices of the Bank to demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions;
- Submit a periodic report to IFC.
For inquiries about the project, contact:
Mr Ajith Wickremaratne
Vice President, Corporate Banking
National Development Bank PLC
40, Navam Mawatha
Colombo 2, Sri Lanka
Ph: +94 11 2347912
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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