OREANDA-NEWS. December 10, 2008. The EBRD is supporting private sector investments in energy efficiency and renewables in Kazakhstan with a new US75 million framework under which loans will be provided to participating banks for on-lending to local companies, reported the press-centre of EBRD.

As a first project under the framework a US 10 million loan to Bank Center Credit has been approved. Bank Center Credit is the sixth largest bank in Kazakhstan and its participation in the framework is expected to generate strong interest from other competitors.

The framework also includes donor funded technical assistance to help companies identify areas of energy losses, propose technical solutions for lowering energy consumption and project preparation. The maximum sub-loan to companies who want to invest in energy efficiency and renewables will be US 7 million, with the average loan size expected to be in the range between US 250,000 and US 2 million.

For the EBRD the new framework represents a significant increase of its long-standing efforts to support the modernisation and improvement of Kazakhstan’s power and energy sector. The Bank signed a Sustainable Energy Action Plan with the government of Kazakhstan earlier this year and has invested in power plant refurbishment as well as in grid modernisation over the years.

These investments will also help alleviate the country’s major challenge in the energy sector: about 80 per cent of the power generation capacity is concentrated in the north, while transmission to the south, where demand has been rising rapidly, is insufficient.

Under these circumstances, and also in the light of the current global financial crisis which has reduced liquidity and lending activities of banks, energy efficiency investments play a particularly important role to help Kazakh companies and the country to save energy.

According to government calculations, Kazakhstan’s energy intensity is almost ten times as high as in developed economies. An average of 15 per cent of the electricity generated in Kazakhstan is lost before it reaches consumers due to the widespread deterioration of the country’s power infrastructure. The government estimates that the equivalent of more than 60 million tons of coals annually could be saved through higher energy efficiency.

Olivier Descamps, EBRD Business Group Director for Central Asia, said “the framework represents a further bold move by the EBRD which will benefit local banks as well as local producers and, eventually, consumers. The EBRD has been at the forefront of promoting energy efficiency, savings and renewables and the new initiative for Kazakhstan can build on successful predecessors in Bulgaria, Ukraine and the Slovak Republic. It comes especially timely when it will also serve as a welcome stimulus to lending activities of banks in Kazakhstan.”

Since the beginning of its operations in Kazakhstan in 1991, the EBRD and its partners have invested around \\$6 billion in more than 100 projects in the country and the Bank has become the largest single investor in Kazakhstan outside the oil and gas sector.