1. Consultancy support for the in-depth appraisal of the financial cooperation component Identification of Financial Instruments Thailand Refrigeration and Air Conditioning NAMA (RAC NAMA) Month date, 20145 Dr. Thomas Schiller MACS Energy & Water GmbH Arnsburger Str. 64, 60385 Frankfurt, Germany Tel +49-69-943188-0, Fax +49-69-943188-18 e-mail: thomas.schiller@macsonline.de Internet: www.macsonline.de

2. 1 www.macsonline.de Presentation Outline  Rationale of Financial Component  Overview of Financing Instruments and Mechanisms  Credit Lines  Loan Guarantees  Vendor Credit  Funds  Financial Contribution  Key Issues

3. 2 www.macsonline.de  Conversion of Production  Domestic AC  Commercial Refrigeration Target of RAC NAMA Financial Component

4. 3 www.macsonline.de RAC Stakeholder in Thailand Producer of RAC Equipment Incl. suppliers Retail Vendor of RAC Equipment Buyer of RAC Equipment giz NAMA Facility Commercial Banks (Fis) Other Funds

5. 4 www.macsonline.de The Challenge for the Financial Component Financial/Cr edit Markets NAMA Targets Product Markets

6. 5 www.macsonline.de Credit Line

7. 6 www.macsonline.de Credit Line for purchase of RAC equipment Targeted Credit Line  Leverage of NAMA funds by Partner FI ?  GIZ needs at least one Partner FI to handle repayments  How serious is the revolving approach?  GIZ can be involved in Credit Line and Loan Pre-Approval Partner FI Financier (IFI) NAMA Facility giz Buyer of standard and non-standard RAC Equipment

8. 7 www.macsonline.de Credit Line for RAC production conversion Targeted Credit Line Partner FI Financier (IFI) NAMA Facility giz Producer of RAC Equipment  Leverage of NAMA funds by Partner FI ?  GIZ needs at least one Partner FI to handle repayments  How serious is the revolving approach?  GIZ can be involved in Credit Line and Loan Pre-Approval

9. 8 www.macsonline.de Loan Guarantee

10. 9 www.macsonline.de Loan Guarantee for RAC targeted credits Partner FI Financier (IFI) NAMA Facility giz Producer of RAC Equipment Loan Guarantee  Limited Leverage  Investor can improve his collateral  GIZ Approval (Ex ante)  What about counter-guarantee to avoid Moral Hazzard

11. 10 www.macsonline.de Vendor Credit

12. 11 www.macsonline.de Targeted Refinancing of Vendor Credit Financier (IFI) NAMA Facility giz  Leverage of NAMA funds by Partner FI ?  what about the repayment (revolving) ?  GIZ can be involved in Loan Pre-Approval Partner FI Retail Vendor of RAC Equipment Buyer of RAC Equipment Targeted Refinancing Line Targeted Credit Line Consumer Loan

13. 12 www.macsonline.de Funds

14. 13 www.macsonline.de Energy Efficiency Revolving Fund (EERF)  Established 2003  Total Investment USD 522 million  USD 236 EERF, USD 286 Banks  Majority replacement of Chillers and bio gas facilities  Phased out in 2011, according to DEDE Banks don’t need government support for EE/RE lending (CCAP, 2012)

15. 14 www.macsonline.de Energy Conservation Promotion Fund (ENCON) Energy Conservation Promotion Act: ENCON established in 1992 based on Tax on petroleum  Phase I 1995-1999  Phase II 2000-2004  Phase III 2005-2011 Fund raising: USD 50 million per year

16. 15 www.macsonline.de Investment Fund Participation Financier (IFI) NAMA Facility giz Partner FI Retail Vendor of RAC Equipment Buyer of RAC Equipment Targeted Line Targeted Credit Line Consumer Loan Other Funds Participation

17. 16 www.macsonline.de Structured Funds (as Public Private Partnership) TA Facility giz NAMA / GCF Public Investor Private Investor Capacity Building, etc

18. 17 www.macsonline.de Financial Contribution

19. 18 www.macsonline.de Financial Contribution for Production Conversion Partner FI Financier (IFI) NAMA Facility giz Producer of RAC Equipment Financial Contribution  Leverage of NAMA grant funds  Contribution to Interest rate and/or principal  GIZ Approval (Ex ate – Ex post)  No repayments expected

20. 19 www.macsonline.de Additional Financial Incentives Financier (IFI) NAMA Facility giz Partner FI Retail Vendor of RAC Equipment Buyer of RAC Equipment Existing RE/EE Credit Line Targeted Credit Line Consumer Loan Other Funds Financial Contribution Incentive for RAC

21. 20 www.macsonline.de Key Questions  Should the GRIF have its own legal personality or is it just an “account” ?  Does GIZ intend to leverage (NAMA) grants directly or indirectly?  If the NAMA grant is supposed to be transferred into loans, how to handle repayments?  Under what conditions “grants” are an acceptable instrument ?  How to integrate a “loan window” and a “grant window”?  Will a financial offer trigger demand for green RAC?  Where is the “business case” for green RAC from a bank perspective (market size)?