ClimateFinancingatDFCCBank,SriLanka

DFCCBANKPLC

DFCCBank,wassetupin1955asSriLanka’sfirstDevelopmentFinanceInstitution.Thebank is renownedforitsprojectfinancing andSMEfinancingexpertise.

Governmenthasalwaysheldaminorityownership stake.TheBank’s shareshavebeenlistedsince1956.

InOctober2015,DFCCBankanditscommercialbanking subsidiary amalgamated- DFCC isnowafullserviceLicensedCommercialBank.

MarketcapitalizationofLKR34.5billion (USD230million) - 1.26%oftheColombo StockExchange

TotalAssetsLKR290billion (USD1.93billion)

Rating- National:AA-(lka)Fitch;International:B+(Fitch) andB(S&P)

Vision: “Tobetheleadingfinancialsolutionsprovidersustainablydevelopingindividualsandbusinesses”

DFCCBank&ClimateFinance

ClimateFinanceinSriLankahasmainlyconsistedoffinancingprivatesectorRenewableEnergy(RE)generationandEnergyEfficiency(EE)initiatives.

Theimpetusforfinancingcamethrough twolandmarkprojects– EnergyServicesDelivery(ESD)Project(1997-2002)andRenewableEnergyforRuralEconomicDevelopment(RERED)Project(2002-2011)fundedbyWorldBank&GlobalEnvironmentFundandimplementedbyDFCCBank.

ESDandREREDprojectsfunded218.7MWofgridconnectedminihydropowerand10.8MWofwindpowercapacity.

Theoff-gridcomponentoftheprojectprovidedelectricitycloseto140,000householdsthroughsolarhomessystemsandcommunitybasedmicro-hydrosystems.

•1984- AnOff-Grid SolarHomeSystemassemblyplant•1996- SriLanka’s1st privatesectorREgeneration project, a0.96MWmini-hydro•2010- SriLanka’s1st privatesectorWindproject (10MW)•2016- SriLanka’s1st privatesectorgridscaleSolarproject (10MW)•2016– SustainableBiomassbasedpowerproject (4MW)

PioneeringrolefundingREProjects

•56MWofcapacitywill beaddedthroughgridconnected:•hydro(22MW)•wind(20MW),•solar(10MW)• sustainable bio-mass(4MW)projects.

DFCCBankiscurrently

managingaEUR90mEuropeanInvestmentBankcredit

line forSME&GreenEnergy

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DomesticSourcesofClimateFinance

•EIBSME&GreenEnergycreditlinewasfullyallocatedin2015.•E-Friends(RevolvingFund)tobelaunched–onlyforSMEs•However,endingofcreditlinesdidnotleadtoaslowdowninREinvestment!

Bankfinancing- Ownfundsand/orfromCreditLines

•CFVentures,LankaVentures(LVL)providedequity/quasi-debtforREprojects•LVL,nowanaffiliate,wasset-upbyDFCCBankasoneofLanka’sfirstVentureCapitalfirms

VentureCapital

•byRECompanies/DedicatedFunds(e.g. LVLEnergyFund)•DFCChasinvestedinLVLEnergyFund

PrivateDebt/PreferenceShare/Equityissues

•DFCCmanagedthe1st listingofanREIPP- Vallibel PowerErathnePLCin2006•OtherREfirmshavesincebeenlisted

ListingonColomboStockExchange

•noexchangerisk•However,domesticlong-termdebtfinancingisavailableonlyonvariablerates(otherthanfromtheEIBcreditline)- Interestrateriskcouldbeabsorbedduetohighfeedintariffs.However,thecurrentpolicyintentionistogoforauctionbasedtariffs.LackoffixedrateLKRfinancingisadrawback

AdvantageofDomesticFinancing

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SustainableBankingPrinciples- anIndustrywideCommitment

InNovember2015,participatingSriLankanbanksincludingDFCCBank,adoptedtheSustainableBankingPrinciples undertheSustainableFinance

Initiative(SFI)

Createsajointinitiativethatpromotesbest

practicesinSustainableFinance.

Willbuildindustrywidecapacity in

environmentalandsocialriskmanagement

FirststepinaprocessthatwillmakeSriLankaapartofagrowinggroupofemerging

countrieswherebanksandgovernmentsarecreatingsustainable

financeframeworksandincentives.

SustainableBankingPrinciples

BusinessActivities:Environmentaland

SocialRiskManagement

BusinessOperations:

EnvironmentalandSocialFootprint

Rightsoftherespectivestakeholders

FinancialInclusion

E&SGovernance Promote“EthicalFinance”

Promote“GreenEconomy”growth CapacityBuilding

CollaborativePartnerships

Promotetransparencyandaccountability

No“racetothebottom”

ThankYouforYourAttention!

NalinKarunatilekaVicePresident– ProjectManagement&BCP

DFCCBankPLC73/5,GalleRoad,Colombo 3,SriLankaTel.+9411-2442442, Fax.+9411-244376Email:NalinKarunatileka@dfccbank.com

www.dfcc.lk