Bank aus Verantwortung

KfW Entwicklungsbank

German Financial Cooperation with Mongolia

Berlin, April 22nd 2013

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60 years of KfW Financing with a public mission

› Promotional bank of the Federal Republic of Germany

› Founded in 1948 as Kreditanstalt für Wiederaufbau

› Shareholders: 80% Federal Republic, Headquarters: Frankfurt am Main Branches: Berlin, Bonn and Cologne

› Representative offices: around 70 offices and representations worldwide

› Balance sheet total at end 2011: EUR 494.8 billion

› Financing volume 2011: EUR 70.4 billion › Around 4,763 employees (2011) › Best rating: AAA/Aaa/AAA

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A bank with a wide array of functions

We promote development

Promotion of developing and

transition countries

International businessWe promote Germany

Promotion construction

of new housing and modernisation

as well as education

Promotion SMEs, business founders,

start-ups

Financing municipal infrastructure

projects and global loans Germany

agency business for Federal

Government

Domestic promotionWe ensure

internationalisation

International project and

export finance

Promotion of environmental and climate protection

Business Area Mittelstandsban

k

Business Area Privatkundenban

k

Business Area Kommunalbank

Business AreaExport and Project

Finance

Business Area KfW

Development Bank/DEG

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Some key figures (2011)

EUR 28.2 billionEUR 13.1 billion

Portfolio of which KfW‘s own funds

450Staff

549 in 85 countriesOngoing projects

EUR 1.2 billionCommitments 2011

EUR 1.1 billionDisbursement 2011

EUR 5.6 billionPortfolio 2011

EUR 3.3 billion EUR 1.6 billion

Disbursements 2011 of which KfW‘s own funds

EUR 4.5 billionEUR 2.6 billion

Commitments 2011 of which KfW‘s own funds

6502,680 in 134 countries Ongoing projects

Staff (without local staff)

Development Bank

DEG

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KfW Development Bank and DEG Worldwide presence - over 70 representative offices

Tiflis

JerewanDamaskusAmman

Kampala

WindhoekPretoria

Lusaka

Skopje Ankara

KiewBelgradPrištinaSarajevo

Tirana

Berlin

Frankfurt

Istanbul

LondonBrüssel

Köln

Podgorica

Bonn

Juba

Kairo

Al-Bireh

Addis Abeba

Kigali

Rabat

Dakar

Accra

Ouagadougou

Jaunde

Bamako

Cotonou

Kinshasa

Niamey Manila

Baku Beijing

Jakarta

KabulIslamabad

Ulan Bator

HanoiDhaka

BishkekTaschkentDushanbe

BangkokPhnom Phen

KathmanduNeu-Delhi

Mumbai

Moskau

LimaLa Paz Brasilia

ManaguaTegucigalpa

Mexiko-Stadt

São Paulo

QuitoBogotá

Guatemala-Stadt

New York

Sanaa

Maputo

Daressalam

AntananarivoLilongwe

Abu Dhabi

Johannesburg

Nairobi

San Salvador

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German Financial Cooperation Products and their source of funds

Budget funds (subsidies)

Financial Cooperation (FC)

FC Development Loans

Mixed Financing Composite Loans

Reduced Interest Loans

FC Promotional Loans

Flexible terms near market rates

KfW market funds KfW

Regular FC grants & loans

Grants Concessional Loans

(IDA, Standard)

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German Financial Cooperation Products and their source of funds

German Government is able to offer through KfW Development Bank a broad range the of tailor-made loans depending on the type of purpose, project and the conditions in the respective sector. We are able to accompany different project or program types with financing solutions that suit its capacity and needs. Concessional Terms (all except Promotional Loans) are subject to provision of subsidies from German Government.

G

rant

IDA

- Lo

an

Development Loans

Mixed Financing

CompositeLoan

Reduced- Interest

Loan

Interest

rate

Stan

dard

Co

ndit

ion

Prom

otio

nal

Loan

co

mm

erci

al

term

s

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Budget funds

KfW funds

Reduced interest loans

Grant Loan

KfW Partner country

Grant reduces the interest rate for the partner country

i

Hedging of credit risk through German government guarantee lowers the interest rate for the partner considerably

Risk coverage

Guarantee of German government

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FC development loans – brief overview

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KfWIntergovernmental agreement

Loan agreement

guarantee

KS, PV,VA, BE, AK, SP

Budget funds

KfW funds

Disbursement

BMZ

Capital market BMZ

Foreign debtor

Foreign government

ECA / German

government

Debt service

Payment guarantee

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FC development loans – involved parties

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German Cooperation with Mongolia

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Energy Efficiency in Grid-Based

Power Supply

under way

New Program

Energy Efficiency

III (Transmission

and Substitution)

planned for 2014

Priority Area Energy Efficiency

EnergyEfficiency II

(TPP IV UB)

FC 8.5 Mio. EUR

under way

Energy Efficiency I

(TPP Darkhan)

FC 10.5 Mio. EUR

under way

Renewable Energy I

(Bogdyn Hydropowerpla

nt)

FC 6.1 Mio. EUR

under way

New Program

Energy and Environment

Darkhan(Energy

efficiency in TPPs)

planned for 2014

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Climate Change Adaptation and Preservation of

Biodiversity

ongoing

Program Biodiversity and

Adoption to Climate Change

11.5 Mio. EUR

planned for 2013

Priority Area Biodiversity

26.04.23

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Priority Area Energy Efficiency

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Energy Sector Programme I (2004 – 2013)

› Total Funding Volume 12.90 million IDA-Loan

› Programme Objectives Contribution to reliable DC supply in power plants and in substations during normal and emergency conditions;

Contribution to reliable automatic transfer of meter data from substations and power plants into the control centre

› Programme Measures Rehabilitation of DC supply systems in substations including supply of spare parts and corresponding staff training;

Establishment of new AMR system in CES including data collection equipment and interfacing, spare parts supply and corresponding staff training

› Target Area Central Energy System of Mongolia

› Project Executing Agency National Dispatching Center; National Transmission Company

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Renewable Energy Programme I (2006 – 2014)

› Total Funding Volume 6.10 million EUR Grant

› Programme Objective Improvement of DC supply system in Uliastai based on hydropower

› Programme Measures Rehabilitation of hydropowerplant Bogdyn;Rehabilitation of distribution grid Uliastai

› Target Area Uliastai, Zavkhan Aimag

› Project Executing Agency Ministry of Energy of Mongolia

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Energy Efficiency Programme I (2010 – 2014)

› Total Funding Volume 10.50 million EUR IDA-Loan

› Programme Objective Contribution to more efficient power supply in the city of Darkhan

› Programme Measures Modernization of TPP Darkhan including expansion of turbine house, supply and installation of new 35MW steam turbine and corresponding facilities; consultancy services

› Target Area Darkhan, Selenge Aimag

› Project Executing Agency Darkhan Thermal Power Plant Joint Stock Company

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Energy Efficiency Programme II (2012 – 2015)

› Total Funding Volume 8.50 million EUR IDA-Loan

› Programme Objective Improvement of energy efficiency and reliabilty of TPP IV; Reduction of specific coal consumption and specific emissions

› Programme Measures Modernization of TPP IV including supply and installation of new water treatment plant, RPM-regulated power unit, pipe cleaning systems, and consultancy services

› Target Area City of Ulaanbaatar

› Project Executing Agency Thermal Power Plant IV

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Outlook – Focal Area Energy Efficiency

› The Federal Ministry for Economic Cooperation and Development (BMZ) is planning further commitments for investments in the Mongolian energy sector in 2013 and 2014 to be implemented through KfW.

› 2013: up to 30 million EUR Development Loan (special funds from IKLU-facility) › 2014: up to 10 million EUR Standard Loan (regular country quota)

› New projects are being developed based on investment planning of Ministry of Energy of Mongolia and on focal area Energy Efficiency strategy of German BMZ.

› Use of funds envisaged for › Energy efficiency and environmental measures in Combined Heating Plants

(esp. Darkhan)› Energy efficiency and supply security measures in power networks

› Close cooperation between Ministry of Energy and German implementing agencies GIZ and KfW in project identification and preparation.

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Priority Area Biodiversity

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Biodiversity and Adoption to Climate Change

› Total Funding Volume 11.50 million EUR grant

› Programme Objective Strenghtening of Mongolian protected area system with special regard to climate change

Improvement of living conditions of local population

› Programme Measures Implementation of a competition based application mechanism for

› Development of key protected area infrastructure; Procurement of equipment for protected areas and regional training centres; Establishment of buffer zone funds; Support in preparation of related management plans

› Target Area Mongolian Protected Areas

› Project Executing Agency Ministry of Environment and Green Development

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Outlook – Focal Area Biodiversity Steps already taken / yet to be taken:

› 2012 March: 11.5 million EUR commitment from German Government through KfW

› 2012 November: KfW appraisal mission to Mongolia› 2013 April: Appraisal report submitted to German Government

Next steps › Approval to be received from German Government› Draft Financing Agreement to be submitted to MED for review › Approval procedure on Mongolian side according to Mongolian regulations› Signing of Financing Agreement between Mongolia and KfW

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›Programmes outside Priority Areas

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Regional Transport Infrastructure Development To Improve Food Supply to Ulaanbaatar

› Total Funding Volume 11.50 million EUR IDA loan

› Programme Objective Improvement of living conditions and income situation of local population through improved acccess to key markets, health and social facilities;

Improvement of local food supply to the capital city.

› Programme Measures Construction of feeder roads from SoumCentres Bornuur, Jargalant and Batsumber to National Highway towards UB.

› Target Area Mainly Tuv and Selenge Aimags

› Project Executing Agency Ministry of Roads and Transport

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Environmentally Sound City Development Ulaanbaatar Waste Water Treatment Plant in Nisekh/ Yarmag › Funds for the project committed by German Government since

Government Negotiations 2008.› Project preparation currently on hold due to outstanding decision

from Mongolian Government regarding financing source.› Alternative use of funds within the agreed areal framework

(„reprogramming“) is possible. › Respective application needs to be submitted to German side.› Final decision from Mongolian Government is expected latest during

upcoming Intergovernmental Consultations.

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Future Mongolian German Financial Cooperation Introducing of Promotional Loan Financing – also possible outside

priority areas

Promotional loans are a financial instrument of German Development Cooperation to close the gap between concessionary and pure commercial lending. › Financing of infrastructure or equipment in the fields of transport, energy,

mineral resources, etc.› Not bound to the priority areas of cooperation; more flexible. But all projects

shall have a development impact.

› Borrower can be the Government, a sub-sovereign, like a municipality or a province, or a fully or partly state owned enterprise providing a state guarantee.

› Promotional loans are entirely refinanced by KfW market funds. Pricing on the basis of KfW’s low funding costs (AAA rating).

Bank aus Verantwortung

Thank you for your attention

KfW Bankengruppe KfW Office UlaanbaatarEva Schneider, Country Manager Sascha Stadtler, DirectorTel +49 69 7431 3648 Tel +976 70115952 Mob +49 162 1070429 Mob +976 99108953Eva.Schneider@kfw.de Sascha.Stadtler@kfw.de