Leasing companies and Sustainable Energy investment – a plethora of exciting business opportunities IFC experience in Europe, Middle East, and North Africa regions Prague January 1-3, 2012

IFC 2 Sustainability Additionality – advisory with focus on creating own internal capacity Member of the World Bank Group – political risks mitigation Efficiency - compare to other Development Institutions IFC is the largest global development institution (182 member countries), focused on the private sector in developing countries, working in their frontier regions % of portfolio, investment portfolio in Russia - $2.24 bln

IFC Sustainable Energy Investments via FIs 3 Country: Peru PFI: BBVA Banco Continental IFC investment: $30M credit line Countries: Central/Eastern Europe FIs: Multiple banks IFC investment: $321M in lines of credit and guarantee facilities Country: China FIs: Industrial Bank, Bank of Beijing and Shanghai Pudong Development Bank IFC investment: $275M risk sharing facilities support SE loans of more than $500M Country: Turkey FI: Yapi Kredi Leasing IFC investment: $75M credit line Country: Mexico PFI: Vertice IFC investment: $20M line of credit for energy efficient housing Ongoing: Panama, Costa Rica, Country: Brazil FIs: Banco Real & Unibanco IFC investment: $80M credit line Country: Russia, Ukraine, Belarus, FIs: 12 Financial Institutions IFC investment: $185M in credit lines

Key Takeaway from IFC experience in Europe, Central Asia, and Middle East and North Africa regions There is a HUGE market for Energy Efficiency leasing finance Market is DIVERSE – many niches Niche LEADERSHIP possible IFC provides funding and/or guarantees + Advisory Services COMPETITIVE EDGE in new markets 4

Achieving 45% energy efficiency potential in Russia would cost USD 320 billion Energy Efficiency Potential (WB study): Manufacturing industry: $37 billion Housing and utilities sector : $43 billion Power sector: $106 billion investments annually Developing economies need $97 billion in SEF annually * 5 Dispersed resource New business opportunities for banks and leasing companies: financing of energy and resource efficiency projects in SME and corporate sector * Source: McKinsey Global Institute 2008

A capital investment resulting in improvement against baseline: Energy Efficiency (EE): Decrease in per unit (and/or total) energy consumption Clean Energy (CE): More access to energy with less impact on the environment (including renewable sources) Cleaner Production (CP): Increase in material yield, reduction in emission of waste and hazardous substances A repair/upgrade, replacement of equipment units, expansion of facilities 6 Sustainable Energy Finance Project

Expanded market share through new business line: Innovative product/first mover advantage Sell on value to customer, not pricing Monetize existing client base, attract quality new clients New marketing channels through vendor partnerships Improved risk profile of portfolio: Energy cost savings as a part of cash-flow IFC risk sharing products Positive social and environmental impacts: Enhanced brand reputation, PR opportunities Key Benefits for Financial Institutions For Informational Purposes Only 7

12 partner Financial Institutions 250 projects / $213M worth financed Annual energy savings over $35M Annual energy consumption down by 1674GWh Greenhouse gas emission down by tСО2 per year Median project amount $300K ($900 average) 8 Russian experience

Work with Financial Institutions 9 Investment + Advisory Standalone Advisory EMENA RUSSIA Regional expansion

10 EE/RE Leasing Features All types of Leasing Companies can benefit from Partnership Opportunities 10 Partners can be: Equipment Manufacturers Product Retailers Installation Contractors Electric and Heat Distribution Companies Engineering Consultants Marketing and Sales Representatives Energy Services Companies (ESCOs) Benefits under our terms: Many types of equipment may be financed No minimum or maximum size Can be utilized in all sectors Equipment may be reused (co- generation, large boilers, industrial processes) New marketing channel through new vendor partnerships

11 CONFECTIONARY FACTORY Process equipment: new automatic chocolate line Investment: $233,000 Energy cost reduced: 33%/unit Payback: 2 years Improved product quality, increase in output capacity CAR MANUFACTURING PLANT Lighting system retrofit: new automatic lighting management system Investment: $300,000 Savings: $100,000/year Payback: 3 years Improved quality of lighting SUNFLOWER OIL PRODUCER Renewable energy: boiler fueled by sunflower seed husks Investment: $1,100,000 Gas savings: 660,000 m3/month of gas per month ($39,000/month) Payback: ~2.5 years EXAMPLES

12 YAPI KREDI LEASING Turkey (‘09-10) Process equipment light industry Investment: $50M IFC loan Energy cost reduced: 36%/unit Projects: 39 Median project amount: $315 ($700 average) Financed: $28M Improved product quality, increase in output capacity BOILERS MANUFACTURING PLANT Process equipment: bending machine + plasma cutting system to make gas boilers Investment (leasing): $194,000 Savings: $235,000/year Payback: < 1 year Improved quality EXAMPLES CO-GENERATION Energy equipment : new gas piston cogeneration machine Investment: $2,4M Energy consumption per unit of output down: 33% Annual energy savings : $ Payback: 2 years Improved product quality, increase in output capacity

Contacts Europe and Central Asia Region IFC Advisory services : Maxim TitovProgram Manager Russia Sustainable Energy Finance Program Tel: +7 (495) For Informational Purposes Only 13 Elena Shonya Deputy Program Manager Russia Sustainable Energy Finance Program Tel: +7 (495)

Eligible transaction must be a project to finance reconstruction, renovation or refurbishment Financing may be in the form of sub-loans/leases, aimed at investing into fixed assets and decreasing energy consumption of the borrower or utilizing renewable energy Financing for new projects, not refinancing of an existing loan/lease Eligible are projects such as: Generic equipment (HVAC, lightning, compressors, etc)  Energy savings per unit (ESU) ≥ 15% Process equipment  Energy savings per unit (ESU) ≥ 15% Cogeneration (CHP)  Heat utilization ≥ 60% Eligibility Criteria For Informational Purposes Only 14

What are Sustainable Energy Finance Projects? SectorPotential BorrowerEnergy Efficient Equipment IndustrialIndustrial companies, SMEs and MSMEs Energy efficient production lines Waste heat recovery devices Heating systems upgrades Efficient boilers and heaters Fuel switching (coal-gas, coal-biomass) Electricity peak-load control systems Cogeneration units CommercialHousing complexes operators, maintenance companies; Housing developers Heating and ventilation equipment Control and metering systems Electricity peak-load control systems Air-conditioners Heat pumps, solar water heaters MunicipalMunicipalities, district heating companies, streetlighting operators, public buildings operators Boilers for district heating as well as for public/municipal buildings Heat exchangers, pipes for infrastructure projects Cogeneration units Complex EE projects 15