The Partial Risk Sharing Facility for Energy Efficiency (PRSF) aims to support India’s Energy Savings Performance Contracting (ESPC) market for Energy Efficiency projects. It provides guarantees to the Participating Financial Institutions (PFIs) i.e. Banks/ Financial Institutions/ Non-Banking Financial Company for the Energy Efficiency loans extended by them through Energy Service Companies (ESCOs).
PRSF was launched by the Small Industries Development Bank of India (SIDBI), India’s foremost financial Institution to promote, finance, and develop Micro, Small & Medium Enterprises (MSMEs) in India, with a risk-sharing corpus of US$ 37 million.
• Stimulate and transform India’s ESPC-based ESCO market by promoting increased level of EE projects
• Create a banking ecosystem to finance ESCO projects in India
EESL empanels financial institutions to access the PRSF fund corpus and lends to ESCOs or host entities implementing ESPC-based EE projects, based on eligibility criteria.
The project is supported by the World Bank as the Project Implementing Entity. As the Technical Assistance Executing Agency, Energy Efficiency Services Limited (EESL) works on developing a pan-India pipeline of ESCO projects. SIDBI (Project Executing Agency (PEA) serves as a guarantor to loans given by banks, Participating Financial Institutions (PFIs), Non-Banking Financial Companies (NBFCs) to ESCOs, and ESCO-implemented projects, thereby minimizing risk.
PRSF consists of a risk-sharing facility for energy efficiency, managed by SIDBI, (US$37 million), funded from a Global Environmental Facility (GEF) contribution of US$12 million and backstopped by a Clean Technology Fund (CTF) Guarantee, in the form of contingent finance, of US$25 million, and a technical assistance component.
To be eligible to receive PRSF credit guarantees, PFI loans will have to be for ESCO-implemented Energy efficiency projects. Simultaneously, the Implementing ESCO must undertake an energy savings performance contract (ESPC) with the beneficiary host entity.
Projects eligible for PRSFEE funding:
• Large industries (excluding thermal power plants), including those notified under the BEE’s energy consumption norms and standards (i.e., through PAT), or
Extent of guarantee
The extent of guarantee coverage under PRSF is 75% of the loan amount guaranteed. Guarantee cover will be calculated on the lowest of the following:
• Principal outstanding as on date of account turned into NPA
• Principal plus interest as on date of claim has been lodged with PEA, and
• Sanctioned Loan amount guaranteed.
The minimum amount of single guaranteed loan shall be INR 1 million. The maximum amount of loan amount guaranteed shall not exceed INR 150 million.
The maximum tenure of the guarantee will be 5 years (or such other period as may be decided by PEA) from the date of the first disbursement of the guaranteed loan or till the last date of the operational period of PRSF, whichever is earlier. However, the guarantee tenure shall not exceed the loan tenure.
After sanction of a loan by PFIs to eligible ESCO or Host for implementation of EE Projects, the PFI will enter the Guarantee Application details in the PRSF website using the user id & password provided to it by PEA.
PEA shall provide online approval of the guarantee coverage. The guarantee shall come into force from the date of payment of the first installment of guarantee fee to PFI. Further, PFI shall also submit to PEA, for its records, the hard copy of the print-out of the guarantee application duly signed by the Authorised signatory along with the other supporting documents as may be specified by PEA (i.e. Copy of the DPR, copy of the Appraisal Note, Sanction letter, ERMF Compliance certificate, etc.). The guarantee shall apply only to loan amounts disbursed by PFI within a period of 18 months from the date on which the guarantee has been approved.