Bulgaria - Municipal Energy Efficiency Program
Municipal Energy Efficiency Program: Some Good Results!!
Sponsored by USAID and implemented by Electrotek Concepts, Inc., the Bulgarian Municipal Energy Efficiency Program (MEEP) has secured financing for five energy efficiency projects, four of them in the municipal sector. The loans are coming from the United Bank of Bulgaria (UBB), with partial loan guarantees through USAID's Development Credit Authority (DCA).
Two of the most recent projects are in the cities of Silistra and Popovo, Bulgaria. The total cost of the Silistra project is $ 306,059 and the DCA loan represents 71% of this amount, or $216,995. The total cost of the Popovo project is $ 66,639, and the DCA loan represents 64% of this amount, or $42,453. These are significant loan amounts for a Bulgarian Municipality and the multi-year maturities are unique for municipal borrowing in the country. On June 13 and June 18, 2001 UBB's Credit Committee approved the loan applications for financing under the DCA guarantee. The business plans, the cash flow and risk analyses performed by Electrotek can be used as models for other municipal projects prepared for financing under the DCA guarantee mechanism.
The DCA program is a unique financial mechanism to develop sustainable energy efficiency financing. Under the DCA program USAID/Bulgaria provides guarantees (50% of outstanding principal) on behalf of non-sovereign project sponsors (qualifying borrowers) in favor of the UBB. The current project pipeline includes projects worth over US$12 million.
The project shows that projects can be developed and presented in a form attractive for a commercial bank and long term project financing can be secured at terms acceptable both for the municipality and for the bank.
Each of the successfully developed municipal projects is an interesting example of flexible commercial financing schemes applicable to municipal energy efficiency projects. These projects include investments in all parts of the municipal infrastructure, including street lighting, municipal building heating, water and gas supply, urban solid waste treatment renewable energy.
Over 50 projects have been identified and developed to date! The municipal projects funded to date are:
- Pernik Municipal Street Lighting and Building Energy Efficiency Project
(Funded - November 2000) - Pazardjik Municipal Street Lighting Project
(Funded - March 2001) - Silistra Municipal Street Lighting, Building Energy Efficiency and Solar Project
(Funded - June 2001) - Popovo Municipal Solid Waste Transportation Project (Funded - June 2001)
The energy efficiency project in the City of Pernik include:
- Street Lighting Improvement. Similar to the Pazardjik project, the existing obsolete fixtures with inefficient mercury lamps are replaced by new luminaires with high-pressure sodium lamps. New electronic flexible control system is installed. Electricity consumption is reduced 3.1 times while illumination levels are increased significantly across town.
- Heating Systems Improvement in Municipal Buildings. Weather-stripping and introduction of controls in the heating systems of eleven municipally owned buildings. Heat consumption is reduced while comfort level is increased as a result of the project implementation.
The energy efficiency project at the Municipality of Pazardjik aims at improvement of the Street Lighting in the city. The existing obsolete fixtures with inefficient mercury lamps are replaced by new luminaires with high-pressure sodium lamps. The project provides for the installation of new electronic controls and metering devices.
The energy efficiency project at the Municipality of Silistra includes investments for improving the efficiency of space heating at three municipally owned buildings - a school, administrative building and a retirement house, including the installation of a solar hot water system. The project further provides for the reconstruction of the street lighting system of the whole city, similar to the projects of Pernik and Pazardjik.
For more details please download here a Summary of the Business Plan.
The project at the Municipality of Popovo ncludes the replacement of four solid waste collection vehicles with more efficient new vehicles running on LPG capable of compacting the waste and thus reducing significantly expenses of the Municipality for transporting the waste to the waste disposal site.
Electrotek works to identify and develop projects in the following stages:
STAGE I - Identification
Initial "walk-through" energy audit to identify energy efficiency opportunities which merit further study. The Electrotek team measures and analyzes the energy consumption, losses and processes of the facility, and identifies areas for energy savings.
STAGE II - Pre-screening Analysis
Electrotek presents the project sponsor and initial project proposals to the bank for initial review and an assessment of the potential borrower's creditworthiness.
STAGE III - Business Plan Development and Financial Deal Structuring
This process includes an initial credit analysis of the borrower and corporate cash flow projection before maturity, a technical analysis, detailed costs and savings, a financial cash flow analysis of project components, risk analysis, proposed financing plan, and a detailed implementation schedule identifying likely subcontractors and equipment suppliers. This work typically takes 3 to 5 months to complete. Electrotek can provide assistance in negations with the bank about terms and conditions of the loan, disbursement and amortization schedules, and a loan security package.
STAGE IV - Project Implementation and Evaluation
Identifying contractors and organizing a tender for the procurement and installation of the energy efficiency measures. This stage also ensures monitoring and evaluation procedures are in place for the installed measures.
For more information, please contact:
MEEP Program Office
3, Vassil Levski Boulevard, II floor, 1000 Sofia
Phone: (359-2) 987-1903
Fax: (359-2) 987-1927
e-mail: dimtcho@intech.bg