The project of UNDP-GEF and the RK Government: «Sustainable cities for low carbon development»
Stimulation of investments for energy efficiency of municipal infrastructure of the Republic of Kazakhstan
Informational case
Astana 2018
Content
Brief description of UNDP-GEF Project 4
Summary about UNDP-GEF project partners 5
Introduction 6
Climate change. Green-house gases. Energy efficiency 8
Where to get money for energy efficiency? The mechanism of energy service contract. PPP mechanism – energy service contract 12
UNDP-GEF: mechanism of financial support for energy service initiatives 32
Rules for provision of financial support to business («Green grant») 37
List of examples of some energy-service initiatives supported within financial support mechanism 72
Frequently Asked Questions 75
The form of submitting a business proposal for provision of «green subsidies” 80
UNDP-GEF and the RK Government Project «Sustainable cities for 3 low carbon development» Brief description of UNDP-DEF Project
UNDP and the RK Government with financial participation of GEF supports Kazakhstan’s efforts to reduce the impact on climate change in municipal sector, including the development and testing of various conditions and incentives to implement necessary measures and, above all, to improve the energy efficiency of various sectors of housing and utilities, energy supply, transport and waste management. The project “Sustainable cities for low carbon development” assists 15 pilot cities (regions) in several areas: firstly, in defining (identifying) and developing concepts for projects and initiatives that reduce energy consumption; secondly, in preparation of necessary organizational structure for their implementation; thirdly, in supporting the development of a financial and economic model and finding the optimal way to stimulate implementation of projects in the regions. In the end of 2017, within the framework of UNDP-GEF and the RK Government project “Sustainable Cities for Low-Carbon Development”, a model of organizational and financial support was launched to implement low- carbon urban initiatives and it was proposed to test it with participation of MID RK, DAMU Entrepreneurship Development Fund JSC and UNDP through grants from the Global Environmental Facility (GEF). For approbation of support, the “Rules for the provision of financial assistance for the implementation ofa mechanism to stimulate investment in energy efficiency of municipal infrastructure of the Republic of Kazakhstan” were developed. The project is focused on supporting small and medium-sized businesses representatives, as well as the owners of facilities with experience in providing energy services through provision of financial support to them in implementation of energy-efficient municipal projects. Support to low-carbon projects involves subsidy assistance of loan for their implementation, namely, to cover a 10% bank rate of a commercial loan in order to improve the financial indicators of the project and reduce its payback period. Thus, with an average bank loan rate of 15%, the rate for the recipient of financial support from UNDP will be about 5%, which is comparable to the rates for projects in OECD countries. Within the framework of mechanism, technical support is also provided to the project stakeholders – owners of facilities, business companies, banks, local executive bodies for the successful preparation and implementation of energy service projects, including through the promotion of previously tested typical energy saving solutions in cities, such as: installation of automated heat points, modern pumps, modernization of boiler equipment, high- efficient street and indoor lighting, and others. As of October 2018, 33 projects have been approved for the total amount of financing 2.3 billion tenge and leverage support through a reduction in bank rate of 0.4 billion tenge, and a cumulative decrease in energy consumption by 15-70% or 40.2 thousand tons of CO2 equivalent / per year. More detailed information is available on the portal «Energy Efficiency +»: www.eep.kz
The United Nations Development Program (UNDP) cooperates with representatives of all sectors of society, providing assistance to the state construction of countries so that they can withstand the crisis, encouraging and supporting growth resulting in the improvement of life quality of each person. Working in 177 countries and territories, we offer a global vision and local solutions that promote a more full life of people and increase the resilience of nations. www.kz.undp.org
The Global Environment Facility (GEF), which brings together 182 countries, in partnership with international organizations, civil society and private businesses, provides grants to developing countries and countries with economies in transition to jointly address local, national and global environmental issues in order to achieve sustainable development worldwide. Established in 1991, the GEF is currently the largest public donor organization which activity is dedicated to improving the global environment and supporting more than 2,700 projects. www.thegef.org
UNDP-GEF and the RK Government Project 4 «Sustainable cities for low carbon development» Information about UNDP-GEF project partners
Ministry of Investment and Development of the Republic of Kazakhstan:
The Ministry of Investment and Development of the Republic of Kazakhstan is the state body of the Republic of Kazakhstan and the executive partner of UNDP-GEF Project “Sustainable Cities for Low-Carbon Development”, which manages and forms state policy in such areas as energy saving and energy efficiency; government investment policy and investment support policies, creating a favorable investment climate, the implementation of state policy in supporting investments; architectural, urban planning and construction activity, housing relations, utilities and municipal waste management (with the exception of solid domestic waste), state regulation in the sphere of water supply and disposal, heat supply. The implementation of UNDP-GEF Project is carried out with the direct participation and leadership of the Ministry.
“Damu” Entrepreneurship Support Fund JSC:
Mission
The mission of the Fund is to play an active role in the sustainable development of micro, small and medium- size enterprises (MSME) in Kazakhstan, through the implementation of complex and effective support tools.
Tasks
1. Expansion of micro-business lending, development and implementation of tools to support MFOs and credit societies 2. Increase of share of existing MSME coverage by the Fund’s financial programs 3. Improved cost-effectiveness of supported MSME enterprises 4. Attracting additional sources of funding 5. Achievement of the planned level of financial performance 6. Automation of business processes 7. Improving the level of corporate governance
UNDP-GEF and the RK Government Project «Sustainable cities for 5 low carbon development» Introduction
Dear Partner!
This publication has been published to answer the basic questions faced by entrepreneur who plans to implement a business initiative that brings energy saving in municipal infrastructure sectors, thereby contributing to the construction of a “sustainable city”.
In the broad sense of the word “sustainable cities” are cities designed taking into account the impact on the environment, populated by the people trying to minimize consumption of energy, water and food, to exclude unreasonable heat generation, air pollution, including greenhouse gases emissions, as well as pollution of water and other environment.
A sustainable city can provide itself with minimum dependence on the surrounding area, and energy can be efficiently spent, as well as produced as much as possible using renewable sources. The challenge is to ensure the lowest possible ecological footprint and minimize possible pollution. To do this, we must try to use energy efficiently, for example, through improving the energy efficiency of buildings, structures (residential buildings and public buildings), introducing modern LED lighting, upgrading boiler houses, pumping plants, etc. If this practice is applied, the city’s overall contribution to climate change will be minimal.
It is estimated that about 50% of the world’s population lives in cities and urban settlements. These large communities present both challenges and good opportunities for environmentally focused action. In order to make the city more stable, the design and operation of buildings, as well as the lifestyles and minds of residents, must be turned towards stable thinking.
According to the statistics of the Republic of Kazakhstan, about 57% of the country’s population lives in urban areas, given the rapid pace of urbanization, this figure will be about 66% by 2030. In this regard, the cities «assigned» a significant place in terms of impact on climate.
In the UNFCCC National Communications, the “municipal sector” (district heating, lighting, buildings, waste and transport) with a possible reduction in annual GHG emissions of
20-30 million tons of CO2 / year was chosen as a priority for climate change mitigation which represents about 30% of the country’s cumulative total GHG emission reduction.
UNDP-GEF and the RK Government Project 6 «Sustainable cities for low carbon development» In the Republic of Kazakhstan, global programs of country importance are being implemented, such as industrialization of Kazakhstan, the construction of affordable housing, the well-being of the population increases, which leads to the increase of family car fleet, which ultimately increases greenhouse gases emissions. It is also not necessary to exclude deterioration of municipal infrastructure, depreciation of which amounts to 60-65%, as a result of technical losses: energy consumption is 16%; heat supply – 20%; water consumption up to 60%.
Taking into account the above mentioned factors of increasing GHG emissions, the Strategy “Kazakhstan-2050” announced the need for transition to “green economy”, which implies the introduction of technologies that reduce the impact on the environment. This requires the involvement of significant financial resources for the modernization of country’s economy and, in particular, production and infrastructure.
In addition, the deterioration of municipal infrastructure of the municipal sector requires modernization, reduction of energy losses and introduction of modern energy-saving technologies, which solution solely at the expense of the state budget does not seem possible. In this regard, to solve these problems of the municipal sector, there is a need to attract significant private (extrabudgetary) investments in energy efficient modernization projects designed to bring social, economic and, of course, environmental benefits.
In the end of 2017, the Cooperation Agreement was signed between the Ministry of Investment and Development of the Republic of Kazakhstan and Damu Entrepreneurship Development Fund JSC on the implementation of mechanism for encouraging energy efficiency investments in the municipal infrastructure of the Republic of Kazakhstan within the framework of the Joint Project of the Ministry of Investment and Development of the Republic of Kazakhstan and the United Nations Development Program “Sustainable Cities for Low-Carbon Development in Kazakhstan”.
As a result of this Agreement, measures of financial support were identified for the implementation of mechanism for encouraging investments in energy efficiency of the municipal infrastructure of the Republic of Kazakhstan.
UNDP-GEF and the RK Government Project «Sustainable cities for 7 low carbon development» Climate change. Green-house gases and energy saving.
How is energy saving and climate change on the planet are connected? What is the situation in Kazakhstan?
“There is new and convincing evidence that the main part of the warming over the past 50 years is due to human activity.” Global climate models indicate that the increase of CO2 concentration over several decades will lead to the increase in Earth’s surface temperature by 1.5-4.5 °C. Increasing the concentration of other GHGs will further aggravate the problem.
The climate on Earth has never been the same. It is subject to fluctuations in different time scales, ranging from decades to thousands and millions of years. The cycle of the order of 100 thousand years is among the most noticeable fluctuations: the glacial periods when Earth’s climate was colder compared to the present, and the interglacial periods when the climate was warmer.
Fig. 1. The change in global air temperature on the planet
Over the past 10 thousand years, the average global temperature has slightly decreased, the reason for this is the active volcanic activity and a number of other natural causes. However, in the XX century it grew sharply.
The alarm is caused not by the change in temperature observed now, but by the anthropogenic change in the chemical composition of the atmosphere. The greenhouse effect is well studied. Growth of GHGs, primarily CO2 and methane, in the atmosphere according to scientists calculations can lead to a much
UNDP-GEF and the RK Government Project 8 «Sustainable cities for low carbon development» stronger warming of climate than now. A change of temperature is only a signal that confirms concerns.
The problem is the unprecedented increase in CO2 concentration, which has never been observed in the nature before. The reason for this growth is, first of all, anthropogenic emissions of CO2 into the atmosphere when burning fossil fuels.
Climate alteration, which will occur as a result of warming, can hit the economies of individual countries. And Kazakhstan is not an exception. In general, in Kazakhstan over the past 75 years, there has been a widespread increase in surface air temperature. There is an increase in the anomaly of average annual air temperatures up to 2 °C, which is significantly higher than the world average values.
In the regional context, the highest annual average air temperature increased in West Kazakhstan region by 0.38 ºС / 10 years, the lowest – in South Kazakhstan, Almaty, East Kazakhstan, Pavlodar, Atyrau, Aktobe, Karagandy, Akmola regions – by 0 , 22 ... 0.29 ºС / 10 years. In other areas, the growth of averageКазахстанской, annual temperatures Павлодарской, within Атырауской,0.30 ... 0.31 ºС Актюбинской, / 10 years. Карагандинской, Акмолинской областях – на 0,22…0,29 ºС/10 лет. В остальных областях рост среднегодовых температур в пределах 0,30…0,31 ºС/10 лет. On averageВ среднем in Kazakhstan, по Казахстану the rate скорость of increase повышения in average среднегодовой annual температурыair temperature воздуха is 0.28 составляет ºС every 0,28 ºС 10 years.каждые On the 10 seasons лет. По as сезонам a whole в целом in Kazakhstan, по Казахстану the highest наибольший temperature рост температур growth occurs происходит in spring весной и and autumnосенью – by– на0.30 0,30 and и 0.31 0,31 ºС ºС/10 / 10 лет, years, немного a little меньше less in winter зимой –– byна 0.28 0,28 ºС ºС/10 / 10 лет, years, летом in summer наблюдается the lowestнаименьшая rate of temperature скорость повышения growth температурыis observed –– наby 0,190, 19 º С/10ºС / лет.10 years.
ºС 2
1
0
-1
-2
-3 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Рис. Временные ряды и линейный тренд аномалий годовых и сезонных температур воздуха за период Fig. 2. Time series and linear trend of anomalies of annual and seasonal air temperatures for the period 1941 ... 1941…2015 2015, average гг., осреднённых over the territory по территории of Kazakhstan. Казахстана. Anomalies Аномалии are calculated рассчитаны relative относительно to the basic базового period of 1961 ... 1990.периода Smoothed 1961…1990 curve гг. obtained Сглаженная by 11-year кривая sliding получена averaging. 11-летним скользящим осреднением.
Зимы в Казахстане по прогнозам будут более теплыми и влажными. Особенно это характерно для северных, предгорных и горных регионов. Во многие месяцы теплого Wintersпериода in Kazakhstan года are будет expected также to be значительно warmer and wetter. теплее, This но is especially при этом characteristic более сухо. for the Данная northern,неблагоприятная foothill and mountain тенденция regions. наиболее In many months выражена of warm в южных, period of юго the- западныхyear it will иalso западных be much warmer,регионах but Казахстана. at the same time drier. This unfavorable trend is mostly expressed in the southern, south-western and western regions of Kazakhstan. Повышение зимних и летних температур может составить около 2 С к 2030 г. и The increase in winter and summer temperatures may be around 2 °C by 2030 and 2-3 °C and even 2-3 С и даже более в северных регионах к 2050 г. Количество зимних осадков будет more in the northern regions by 2050. The amount of winter precipitation will increase, by 2030 and by 2050возрастать, the increase к is 2030within г. 10-20%, и к 2050 and г. only увеличение in some central лежит and в mountainous пределах 10 areas-20 %,an increaseи только в некоторых центральных и горных районах увеличение осадков к 2050 г. будет более 20 %. Количества осадков летнего сезона лишь в отдельных районах повысится более чем 10 %,
в некоторыхUNDP-GEF and южных регионах количество летних осадков может даже уменьшиться, причемthe RK к Government 2050 г. Projectзона уменьшения осадков будет охватывать более обширные регионы. «Sustainable cities for 9 low carbon development» По мере потепления климата в Казахстане наблюдается тенденция увеличения общего числа случаев с Экстремальными Метеорологическими Явлениями (ЭМЯ). В Казахстане наиболее часто повторяются следующие ЭМЯ: сильный ветер, сильный дождь, сильная метель, сильный снег и сильный туман. Суммарная повторяемость этих явлений составляет 94,3 %. Участившиеся в последние годы ЭМЯ в Казахстане (засуха, жара, сильные осадки, штормовые ветры, снежные бури, град) стали причиной многих чрезвычайных ситуации: потеря урожая, увеличение нагрузки на организм человека, возникновению паводков, сели, оползня, лесных пожаров, разрушению строительных объектов, закрытию дорог, in precipitation by 2050 will be more than 20%. The amount of precipitation of summer season only in some areas will increase by more than 10%, in some southern regions the amount of summer The increase in winter and summer temperatures may be around 2 ° C by 2030 and 2-3 ° C and even precipitationmore in the northernmay even regions decrease, by 2050.and by The 2050 amount the zoneof winter of decreasing precipitation precipitation will increase, will by cover 2030 more and extensiveby 2050 theregions. increase is within 10-20%, and only in some central and mountainous areas an increase in precipitation by 2050 will be more than 20%. The amount of precipitation of summer season only in Assome the climateareas will warms increase in Kazakhstan,by more than there 10%, is in a sometendency southern to increase regions the the total amount number of summer of cases with Extremeprecipitation Meteorological may even Phenomenadecrease, and (EML). by 2050 In Kazakhstan, the zone of the decreasing following precipitation EMAs are most will often cover repeated: more strongextensive wind, regions. heavy rain, heavy snowstorm, heavy snow and heavy fog. The total recurrence of these phenomenaAs the climate is 94.3%. warms in Kazakhstan, there is a tendency to increase the total number of cases with Extreme Meteorological Phenomena (EML). In Kazakhstan, the following EMAs are most often EMLrepeated: that has strong become wind, more heavy frequent rain, heavy in Kazakhstan snowstorm, in recent heavy yearssnow (drought,and heavy heat, fog. heavyThe total rainfall, recurrence storm winds,of these snowstorms, phenomena hail) is 94.3 have%. caused many emergency situations: yield loss, increased load on the human body, floods, mudflows, landslides, forest fires, destruction of building facilities, road closures, EML that has become more frequent in Kazakhstan in recent years (drought, heat, heavy rainfall, fillingstorm andwinds, breaking snowstorms, of moraine hail) lakes, have causedetc. Therefore, many emergency these changes situations: should yieldbe taken loss, intoincreased account load when on planningthe human work body, in variousfloods, mudflows, climate-dependent landslides, sectors forest fires, of economy destruction (agriculture, of building housing facilities, and road utilities, construction,closures, filling transport, and breaking health ofcare, moraine etc.). lakes, etc. Therefore, these changes should be taken into account when planning work in various climate-dependent sectors of economy (agriculture, housing Anand increase utilities, of construction, air temperature transport, for the health rivers care, of mountainetc.). regions means a further degradation of glaciers, an increase in the precipitation limit of liquid sediments, and an increase in mudflow activity. An increase of air temperature for the rivers of mountain regions means a further degradation of Onglaciers, the flat an territory increase ofin Kazakhstan,the precipitation an increase limit of ofliquid air temperature sediments, andwill anlead increase to earlier in mudflow start of actfloodivity. on theOn rivers. the flat Earlier territory terms of Kazakhstan,of the beginning an increase of snowmelt of air temperature will lead to willa reduction lead to earlier in the start period of flofood snow on accumulationthe rivers. Earlier in the terms river of basins, the beginning a decrease of insnowmelt soil freezing, will lead an increaseto a reduction in losses in the and, period consequently, of snow a decreaseaccumulation in the inwater the rivercontent basins, of the a decrease lowland inrivers. soil freezing, an increase in losses and, consequently, a decrease in the water content of the lowland rivers. IncreasingIncreasing fluctuations fluctuations of thethe climateclimate systemsystem –- thisthis is is whatwhat willwill causecause moremore andand more damage. damage. To To reduce thereduce power the of power catastrophic of catastrophic phenomena phenomena in 50-100 in years,50–100 it years,is necessary it is necessary today to today start tothe start reduction the of
emissionsreduction of of CO emissions2, methane of CO2,and other methane GHGs. and other GHGs.
450000 400000 350000
eq., eq., 300000 - 250000 200000 150000 100000
thousand tons thousand 50000
Emissions of CO2 Emissions 0 -50000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Years Power industry Industrial processes Agriculture Wastes ЗИЗЛХLULUCF Fig. Cumulative greenhouse gas emissions in Kazakhstan Fig. 3. Cumulative greenhouse gas emissions in Kazakhstan
The main factor of anthropogenic influence on global climate is emissions from the fuel and energy complex (FEC). In this regard, the relevance of energy saving issues is increasing (see in case study the examples of pilot projects implemented by UNDP in Kazakhstan).
UNDP-GEF and the RK Government Project 10 «Sustainable cities for low carbon development» In 2015, the countries adopted the Paris Climate Agreement. It was a significant step in combat against global climate change, since the world community has shown its readiness to decisive actions. All countries, including Kazakhstan, have adopted national targets for limiting greenhouse gases emissions. Kazakhstan announced its intentions to reduce emissions by 15% and conditionally by 25% with additional international support by 2030 from the base year 1990.
According to the Paris Climate Agreement, low-carbon development will become the main model of the economy. Along with other countries, Kazakhstan needs to develop a long-term low-carbon development strategy, as well as plans for adaptation to climate change, and take appropriate measures.
Proposed measures for implementation of national contribution under the Paris Agreement in Kazakhstan:
• Restarting the system of quotas and GHG trading with identification of total quota in relation to the contribution under the Paris Agreement.
• Providing quota prices that encourage the implementation of voluntary projects to reduce and absorb GHGs.
• Implementation of voluntary initiatives on low-carbon municipal development.
• Implementation of measures to reduce emissions according to the sectors, for example, transport, utilities, waste management, etc.
According to the research in the RK cities (not including industry), up to 60% of energy consumption – greenhouse gases emissions (connected with energy production) is made by municipal buildings (residential and office buildings), which are the basis of cities; up to 20% – on the systems connected with creation of living conditions – energy transfer systems (street lighting, pumping and sewer systems, trunk and intra house utility lines, etc.), and up to 20% – on systems related to transport and solid waste.
As a rule, the largest part of municipal buildings (houses, office buildings, pumping and cleaning systems, street lighting, etc.) were built 30-50 and more years ago and have high rates of wear, which affects energy consumption (heat / power energy) not well with over-consumption in some cases up to 3 times and the corresponding emission of greenhouse gases.
UNDP-GEF and the RK Government Project «Sustainable cities for 11 low carbon development» Where to get money for energy efficiency? The mechanism of energy service contract. PPP mechanism – energy service contract.
The problem of irrational energy consumption can be solved through modernization of objects, facilities and infrastructure. In other cases, the construction of a new instead of the old one is required.
In this regard, the owners – owners of objects of municipal systems require substantial funding. However, the owners of municipal systems are mainly public sector and the population - the owners of the housing stock, who mainly do not have access to debt financing and are limited by the limits of financing or do not have it for modernization. At the same time, the cumulative energy saving that may occur after the upgrade can cover the cost of the required funding for modernization and in world practice is called the principle of Energy Service Contract.
Energy service contract - is a special form of contract aimed at saving operating costs by increasing energy efficiency and introducing technologies that provide energy saving.
A distinctive feature of energy service contract is that the investor’s costs are reimbursed due to the savings achieved after the introduction of energy-saving technologies. Thus, there is no need of equity or lending for the initial cost. Investments necessary for the implementation of the entire project are usually attracted by energy service company.
Energy service company is a legal entity that performs work, provides services in the sphere of energy saving and energy efficiency, i.e. business representative.
UNDP-GEF and the RK Government Project 12 «Sustainable cities for low carbon development» In this regard, the Project of the RK Government and UNDP-GEF “Sustainable Cities for Low-Carbon Development” together with the joint stock company “Entrepreneurship Development Fund“ Damu ”initiated a Business Support Program – Energy Service Companies, which has access to debt financing, is competent in energy saving on achievement of key municipal development indicators - reduction of greenhouse gases emissions.
According to the Law on Energy Saving, a mechanism for energy service contracts is provided with possible implementation period of up to 6 years and compensation for incurred investment costs only due to future cost savings. When drawing up energy service contracts, budgetary institutions financed for the fiscal year from the budget will not always be able to guarantee the return of investment costs incurred by the business, due to necessity of annual justification of energy received.
In this connection, there is an alternative mechanism for the implementation of projects using PPP legislation, which considers conclusion of contracts up to 30 years, a guarantee of return of investment costs incurred, reimbursement of operating costs, guarantees of consumption of business services, etc. At the same time, when you make a PPP contract to save energy, you can also envisage the guarantee of compliance with standards related to energy consumption.
Below on the slides you can learn more about the principle of work of ESCO contracts and PPP projects.
UNDP-GEF and the RK Government Project «Sustainable cities for 13 low carbon development» UNDP in Kazakhstan Global Environmental Facility Agency for Construction and Housing and Utilities
UNDP/GEF and the RK Government project «Removing barriers to improve energy efficiency of municipal heat supply»
Energy service companies (ESCO): International experience, implementation experience in Kazakhstan – outcomes, lessons and conclusions
What is ESCO? The essence of ESCO.
• ESCO (company) - ESCO is an individual or legal entity that provides services and / or implements measures to improve energy efficiency of buildings or premises, and, possibly, assumes a certain share of financial risk. Payments from savings received allow customers to compensate ESCO costs for monitoring, measuring and control. • The underlying concept of an ESCO business model is that the client should not look for initial investment, but is only responsible for the return of investment made or organized by ESCO.
UNDP-GEF and the RK Government Project 14 «Sustainable cities for low carbon development» The basis of ESCO concept in Kazakhstan
• Energy service contract is an agreement between the contractor and the customer, concluded for the purpose of energy saving and increasing the energy efficiency of using energy resources by the customer • Energy Service Company (ESCO) is a company that invests and implements energy saving measures and guarantees a reduction of energy consumption • Basic principles of ESCO business : - ESCO (contractor) invests funds in energy saving measures, but not the customer; - payback of energy saving projects is made at the expense of guaranteed and achieved energy savings; - energy service contracts are concluded for a long-term period (5-7 years on average), as 1 year of savings is not enough to return the ESCO investments; - additional costs from the budget (from the customer) are not required, since the payment of ESCO services is carried out by saving on energy consumption; - upon completion of the contract, the equipment is transferred to the customer’s balance, and the savings are used at its discretion (for example, to increase salaries)
Benefits of ESCO concept
• Stimulates and guarantees energy saving and energy efficiency; • Provides the opportunity to introduce innovative technologies; • Facilitates the reduction of GDP energy intensity; • Return mechanism attracts investors; • Real financial savings, etc;
UNDP-GEF and the RK Government Project «Sustainable cities for 15 low carbon development» The basic principles of contractual relations in the framework of performance contract:
• energy efficiency projects are carried out by specialized energy service companies - ESCO; • Payment for ESCO services depends on the level of energy resources savings achieved; • Investments, debt service and the cost of energy services (the full price of an energy service contract) are gradually returned due to received cost savings in monetary terms, which, in turn, is a result of reduction of energy consumption during the contract period; • Energy service contract is concluded for the period necessary for full reimbursement of expenses for energy saving activities performed; • the contract guarantees the preservation of the effect of energy saving and monetary savings on energy costs (and other expenses) beyond the contract period.
ESCO models
• Savings shared model • Guaranteed Savings Model • Model "Chauffage" (Europe)
UNDP-GEF and the RK Government Project 16 «Sustainable cities for low carbon development» Financial model of shared savings
The ESCO finances all the initial capital costs of the project, and is also fully responsible for return of funds provided by the lender. The client pays a certain percentage to the ESCO (this may be a fixed amount) of the savings received from the project, sufficient for the ESCO to return the project investments to its creditors, pay for the costs of measurement and control, and any other related costs. The end user of energy resources does not have direct contractual obligations to repay the loan to the lender, since this obligation arises from the ESCO.
Financial model of guaranteed savings
The client applies for a loan, finances the project and periodically repays the debt to financial institution. The ESCO does not have direct contractual obligations to repay the loan to the lender, since this obligation arises from the end-user. The ESCO guarantee of savings is not a guarantee of repayment of the borrowed funds to the creditor, it is a guarantee to the end energy consumer to receive savings sufficient, in equivalent terms, to return the borrowed funds to the creditor.
UNDP-GEF and the RK Government Project «Sustainable cities for 17 low carbon development» Financial model «Chauffage»
As a performer of energy services is a resource supplying organization. The resource provider and the customer agree on the supply of the resource at a fixed price (or at a price, which procedure of changing it is fixed in the contract during the term of the contract) for a long period, which can reach 10 and even 30 years. In this case, the resource provider uses the opportunity to reduce costs in the production and transportation of the resource. In addition, the contractor offers the customer energy saving measures that will allow the customer to reduce resource consumption by 3 - 10%. In this scheme, energy saving measures are financed by ESCO, which remains the owner of energy- saving equipment.
Comparative analysis of various models
Note: ESCOs, as a rule, sell their right to receive payments from a project to other “third” parties in order to return project investments and working capital for their use in future projects.
UNDP-GEF and the RK Government Project 18 «Sustainable cities for low carbon development» Forms of energy service contracts
• Consulting/ design: - Service agreement with fixed payment - Service contract with payment upon achieved results • Supply of energy saving equipment: - Contract for the supply of equipment with a fixed price - Lease Agreement for equipment with fixed price and payment - Contract for the supply of equipment with payment by installments (payment from the estimated savings).
Forms of energy service contracts (2):
• Energy service performance contract: - Contract for the provision of complex of energy services with guaranteed savings (Guaranteed Savings). - Agreement on a complex of energy services with shared savings (Shared Savings). - Contract for a complex of energy services with guaranteed return of investments (First Out). • Agreement on energy saving and energy management: - Agreement for supply of energy resources and energy management (Chauffage). • Agreement of overall management of property object : - Property Management Contract with Energy Efficiency Commitments.
UNDP-GEF and the RK Government Project «Sustainable cities for 19 low carbon development» CHARACTERISTICS AND TYPES OF ESCO
• Independent ESCO. They do not belong to power energy or gas sector, manufacturer of the equipment / control and management devices or energy supply company. Many independent ESCOs concentrate on several geographic markets and / or target specific customer market segment. • Manufacturers of construction equipment. Owned by this type of ESCO, many of them have an extensive network of branches that provide national (and international) coverage, and sales departments and specialized national staff provide solutions for energy efficiency, renewable energy and distributed generation for customer market segments. • Utility enterprises. The owners of this type of ESCO are regulated, or state electric power, or gas enterprises. Many ESCOs of this type currently concentrate on regional markets, or in the areas of service of their parent utilities enterprises. • Energy/engineering companies. This type of ESCO is owned by international oil and gas companies, unregulated energy suppliers, or major engineering firms..
FACTORS OF ESCO SUCCESS
• Market reliability and relationship. In the emerging ESCO markets, the credibility of ESCOs and trust relationship with end-users of energy are key elements of trust essential both to the end-users of energy and the ESCO itself if they want to enter into a new kind of long-term contract that can get legal precedent. A critical factor in determining the creditworthiness of end-users of energy is the ability of an ESCO to convince MFIs to allocate funding for their purposes.
• Financial capacity. Financial capacity is mainly associated with the ability to access sustainable project financing. Project financing is the main condition for the implementation of ESCO business model. Without a source of funding, ESCO cannot consider the possibility of carrying out its activity in the country where it cannot obtain a long-term reliable source of funding for its EE projects. ESCOs will not be able to overcome the barrier of project financing if the financial potential of the ESCO is limited due to the fact that the local banking system is unfamiliar with ESCO and unfavorably treats the provision of project loans for energy saving projects on a medium and long-term basis. In fact, only a few MFIs are ready to recognize and accept energy savings on energy efficiency projects as collateral. The problem is also complicated due to a small size of EE projects, if we compare them with large independent energy projects and projects on renewable energy sources (RES). The small size of transaction is often equated to a small market, and this complicates the process of convincing the investor, or bank, of the advisability of investing and the time and resources to explore a new loan product or service, such as financing EE projects.
UNDP-GEF and the RK Government Project 20 «Sustainable cities for low carbon development» ESCO introduction in Kazakhstan
• ESCO in Karaganda (supported by UNDP in 2010-2013) is a company that manages and coordinates all stages of project introduction on energy saving and provides other related services. • The company provides funding for the project in the absence of sufficient funds from the owner. • The owner then pays to the ESCO according to the established payment schedule, which is consistent with the amount of energy savings that the owner receives after the project. • Consumers, as a rule, do not invest their funds in energy-efficient equipment at the initial stage and pay for energy as usual (at the applicable tariff), some of the funds are used to pay for the energy consumed, and the saved component is to pay for installed energy-saving equipment.
Tasks of ESCO-Karaganda
• Testing of the return mechanism of energy saving in buildings (residential and public) by installing AHP and organizing the necessary billing • Capacity building of the company through teaching new activities (energy audit, etc.) • Diagnostics of existing barriers to increasing the energy efficiency of heat supply and the development of options to overcome them
UNDP-GEF and the RK Government Project «Sustainable cities for 21 low carbon development» Planned activity of ESCO Karaganda
• Energy audit of pilot objects • Development and coordination of projects for residential and public buildings • Installation of metering devices and automated heat consumption • Maintenance of installed equipment, including calibration of heat meters. • Preservation of equipment
Capitalization of ESCO Karaganda: • Own funds of NPF Ergonomica LLP • UNDP/GEF Grant
Implementation of ESCO Karaganda model. Success:
• Pilots were implemented in residential buildings • Achieved saving of heat energy • Organized billing of saving • Ensured preservation of installed equipment (insurance agreement) • The company has improved its energy audit skills • Standard contract forms were developed for the implementation of a business model with individuals (performance contracts)
UNDP-GEF and the RK Government Project 22 «Sustainable cities for low carbon development» Implementation of ESCO Karaganda model. Barriers and difficulties:
• ESCO risk increased due to exclusion of the energy supplying organization out of business model (the model was not adopted mainly due to objections of the regulator (DARNM)). As a result, ESCO implemented projects on a different business model (see next slide). • Impossibility to execute projects on public buildings (no legal framework!!!). • Lack of real demand for projects in residential buildings (only 5 projects implemented) • The existing payment system (according to the citywide norm in the absence of MD) does not stimulate the owner to EE. For the same reason, after the installation of EE equipment, there is a saving in heat energy at the facilities, but there is no saving in payment for heat!!!
Karaganda – the existing model «Energy service company» (ESCO) – development of UNDP/GEF project
UNDP-GEF and the RK Government Project «Sustainable cities for 23 low carbon development» Implementation of ESCO Karaganda model. Barriers and difficulties (2):
• The owners do not understand the system of payment for heat energy after implementation of project (the barrier could be overcome by active explanatory work) • It was not possible to achieve 100% payment of the value of savings by the owners of apartments in MRB (the huge role of AAOs in working with the owners - need training in working with tenants!) • “New” thermal regime in apartments after the project implementation (standard- 20-22 degrees after the project implementation against 25 degrees before its implementation), as a barrier to the implementation of projects.
Contract load Year of Total area, Object address Storeyes (heating), Modernization activity construction м2 Gcal/h
Stepnoi Microdistrict-4, 8 1988 9 4 902 0,310 AHP, balancing valves AHP, LWP, balancing and Mustafin Str., 26 1959 3 2 648 0,180 thermostatic valves Abdirov Str., 9 1963 5 6 345 0,330 AHP, LWP
Mir Boulevard, 3а 1960 4 4 840 0,360 AHP
Mir Boulevard, 41/1 1974 9 4 902 0,400 AHP
Before reconstruction: . No heat metering device. . Connection of heating system of the objects to the central heating networks was made according to the dependent scheme through a water-jet elevator. . No regulation of hot water temperature.
UNDP-GEF and the RK Government Project 24 «Sustainable cities for low carbon development» I. Modernization of heat points: . Installed heat meter; . Installed heat automatic equipment; . Full replacement of isolation valves and pipes inside heat point
II. The balancing valves were installed on the stand pipes of heating system (Stepnoi Microdistrict-4,8, Mustafin Str., 26) III. Installation of thermostatic valves on devices of heating pipes (Mustafin Str., 26)
IV. Modernization of HWS connection point: . Installation of Local water-heating point (LWP) With possibility to regulate hot water temperature supplied to consumer (Mustafin Str., 26, Abdirov Str., 9)
The main criteria for assessing energy efficiency and energy saving measures :
. Economic effect (reduction of consumption and cost of energy);
. Environmental effect (reduction of greenhouse gases emissions);
. Indirect benefits (improving the quality level of heat supply);
. Associated benefits (attention to the Direct problems of energy saving leads to increased benefits concern about the overall efficiency of the system, relations between consumers and energy supplying organizations, payments and responsibilities in the housing and utilities sector, attitudes towards the budget EEМ of consumers) Indirect Connected benefits benefits
UNDP-GEF and the RK Government Project «Sustainable cities for 25 low carbon development» Saving of heat energy Reduction Saving of money, Object address of GHG emissions, tenge tons % Gcal
Stepnoi Microdistrict-4, 8 8,93 58,35 31,3 211 821
Mustafin Str., 26 30,6 135,2 72,7 92 714
Abdirov Str., 9 10,75 86,85 46,7 531 404
Mir Boulevard, 3а 27,6 245,69 132,15 304 392
Mir Boulevard, 41/1 33,35 325,6 175,1 643 716
UNDP-GEF and the RK Government Project 26 «Sustainable cities for low carbon development» Public-Private Partnership (PPP) for the implementation of projects on improving energy efficiency
WHY PPP IS NECESSARY FOR THE PROJECTS IN THE SPHERE OF ENERGY SAVING
BACKGROUND FOR APPLICATION OF ENERGY SERVICES WITHIN PPP
Energy saving and improvement of energy efficiency of budget organizations Budget organizations are limited in their ability to pay ESCO services due to the absence of a rule providing payment of ESCO services in the budget legislation Remark: cl. 7 Art. 110 BC of the RK: Budget expenditures aimed at fulfilling state obligations on public-private partnership projects, including state concession obligations, are not subject to sequestration in the budget execution process...
THE MAIN PARTICIPANTS OF PPP PROJECTS
The state partner is the Republic of Kazakhstan, on behalf of which state bodies, state institutions, state-owned enterprises and limited liability partnerships, joint stock companies, fifty or more percent of shares in the authorized capital or voting shares of which directly or indirectly belong to the state, which have entered into an agreement of public-private partnership
Private partner - an individual entrepreneur, a simple partnership, a consortium or a legal entity, with the exception of persons acting as state partners in accordance with the Law “On PPP” who have entered into a public-private partnership agreement Parties of public-private partnership agreement may also be: 1) financial and other organizations providing funding for PPP project (banks, funds); 2) industry operators (JSC Institute for Development of Electric Power Industry and Energy Saving»).
UNDP-GEF and the RK Government Project «Sustainable cities for 27 low carbon development» MAIN DEFINITIONS IN THE SPHERE OF ENERGY SAVING AND PPP
Energy service company – legal entity performing works (services) in the sphere of energy saving and improvement of energy efficiency, including with the involvement of contracting organizations at the expense of own and (or) attracted funds within the framework of energy service agreement energy basis - calculation of each type of energy resources that would be used on the existing objects of the Customer if the Contractor did not implement energy-efficient measures. Within the framework of the Frame Contract for energy basis, indicators of energy resources consumption are applied for the year preceding the year of concluding a Frame Contract; energy efficient measure - installation of new equipment, modernization or replacement of existing equipment and (or) buildings, structures, structures at Customer’s facilities, or revised maintenance actions and procedures to reduce or efficiently use energy resources; price under Frame contract* is determined on the basis of indicators achieved or planned to be achieved as a result of implementation of Frame Contract indicators, including on the basis of the cost of energy resources saved or energy savings resulting from the reduction of specific energy consumption per unit of production. modernization of PPP object — renovation of an object or its elements, components, bringing it in compliance with new requirements and (or) norms, or technical conditions, or quality indicators. The following is mainly modernized: machines, equipment, technological processes; Objects of public-private partnership – property, property complexes, design, construction, creation, reconstruction, modernization and operation of which is performed within the framework of realization of public-private partnership project. Public-private partnerships also include works (services) and innovations to be introduced during the implementation of a public-private partnership project Service contract – public-private partnership agreement providing for the maintenance of public-private partnership object
*Frame contract of energy service agreement dated March 31, 2015 № 402
What is PPP projects?
Standard definition of PPP
PPP is a form of cooperation between a public and private partner, corresponding to the characteristics defined by the Law on PPP Mandatory characteristics of PPP contractual relations for PPP implementation medium or long term implementation of PPP joint participation of partners in PPP implementation pooling resources of partners during PPP implementation
Commercial Code of the RK (Art. 284) The investment project is a set of measures involving investments in creation of new, expansion and renovation of existing industries, including those created, expanded and updated during the implementation of public-private partnership project, including a concession project
Budget Code of the RK (Paragraph 8 Budget Investments and PPP) State investment project - a set of measures aimed at achieving strategic goals of the state through the implementation of public investment and implementation of public-private partnership projects, including concession projects
Conclusion: PPP project is a traditional investment project, not to be confused with the social responsibility of business, charity, etc.
UNDP-GEF and the RK Government Project 28 «Sustainable cities for low carbon development» TYPICAL SCHEME AND STAGES OF PREPARING PPP PROJECTS
developing an investment proposal or a business plan for PPP project Public Partner Private Partner (investor)
- Measures of state support Management of Project - Sources of cost recovery and Investments, creation of experience, reconstruction and identifying a private partner in income generation accordance with Art.31 of the - Forms of participation of modernization of assets Law (competition or direct public partner Technology and Knowledge negotiations) Transfer Attracting innovation
Partnership conclusion of a public-private partnership agreement
PPP project / object / works and services, innovations fulfillment of the terms of the public-private partnership agreement by the parties Society (satisfaction of demand)
The PPP project is considered completed after the parties of PPP contract performed all commitments!
STAGES OF COOPERATION
PUBLIC PARTNER (BUDGET ORGANIZATIONS)
PREPARATION CONCLUSION OF TENDER TENDER AND stage DOCUMENTS stage stage IMPLEMENTATION 1 2 3 OF CONTRACT
Consultations during the Consultations during the evaluation of tender bids development of tender documents for PPP projects
PRIVATE PARTNER (ESCO) Consultants Monitoring and UNDP-GEF evaluation of parameters of realized PPP projects
UNDP-GEF and the RK Government Project «Sustainable cities for 29 low carbon development» UNDP-GEF: STANDARD PROJECT DOCUMENTS FOR PPP PROJECTS
1. “Modernization and maintenance of the State institution “School-gymnasium No. 2 named after Gafu Kairbekov in Astana city" to improve energy efficiency and energy saving" to improve energy efficiency and energy saving in the framework of UNDP-GEF project; 2. “Modernization of secondary school in Temirtau city” to improve energy efficiency and energy saving in the framework of UNDP-GEF project; 3. “Modernization and operation of coal boiler installation by replacing conventional boilers for pyrolysis type boilers in the Municipal State Institution "Secondary school № 7 Temirtau city of Karaganda region”; 4. “Modernization and operation of sewage pumping stations (SPS) at LLP Satpayevsk Heat and Water Supply Enterprise in Satpayev town Karaganda region”; 5. “Creation and operation of a waste sorting plant” to improve energy efficiency and energy saving ”(framework project).
STRUCTURE OF STANDARD DOCUMENTS FOR PPP PROJECTS
Tender documentation for PPP project is designed to determine a Private Partner in a competitive manner, and it contains: requirements for documents confirming compliance of potential private partners with qualification requirements; information sheet containing the description of PPP project, developed according to the structure as per Appendix No. 2 to the Rules; duty station of PPP project; the expected types and amounts of state support, as well as sources of cost recovery and income generation for PPP project; Draft PPP contract; description of criteria to determine the best bid; specification of currency (currencies) in which the parameters of PPP project should be expressed, and exchange rate (currencies), which will be used to bring to a single currency in order to compare and evaluate them; language requirements for tender bid; indication of the right of a potential private partner to change or withdraw its tender bid before the deadline for submission of tender bids; content of tender bid, method, place, deadline and validity of tender bids, as well as conditions for making security for tender bid; Ways to receive explanations on content of tender documentation of PPP project; procedures, place, date and time of opening envelopes with tender bids.
PPP contract – a written agreement defining the rights, duties and responsibilities of the parties of PPP contract, other terms of PPP contract as a part of implementation of PPP project. A PPP contract is a contract containing elements of various contracts provided for by the legislation of the Republic of Kazakhstan. The law on contracts is applied in relevant parts to the relations of the parties of PPP contract which elements are contained in this PPP contract, unless otherwise follows from the agreement of the parties or the substance of PPP contract.
UNDP-GEF and the RK Government Project 30 «Sustainable cities for low carbon development» PRACTICAL APPLICATION OF STANDARD DOCUMENTATION
Stage Description Outcome 1. Analysis of the existing infrastructure Improvement and analysis of indicators on Identification of potential objects for PPP according to administrations of regional akimat equipment wear (heat, energy, water supply, projects, compiling a list for planning and (districts), for example, administration or boiler rooms), collection of data for the last 3 implementing PPP projects, preparing an department of education and for all educational years, refinement of documentation availability appropriate request to the Regional Economy facilities in the region on inspection (audit) of buildings or equipment, Department, clarifying the limits of the local dynamics of indicators on utilities executive body
2. The oblast management forms an order of the The request for expression of interests is placed Order on formation of project team deputy akim of the region (in charge) of the in accordance with paragraph 12 of the Rules 725 Announcement about interest expression request Project group, and also initiates a request for dated November 25, 2015, and specialists and Protocol on the basis of the request of interests expressions of interest based on the initial data experts of UNDP of the RK are invited expression, which will allow to accept or reject, or for the development of documentation for PPP The standard tender documentation is used as a partially use when forming the final PPP Project projects, based on the initial data and supporting basis, then the adaptation is jointly carried out documentation indicators taking into account the actualdata of Phase 1
3. Using the data, the sectoral authorized body The specialists of administration or department Documentation of PPP project is being formed, generates documentation for a specific object (s) form PPP project documentation on the basis of which is the basis for the draft PPP contract (for of a region or objects of a district (for example, the standard documentation of PPP project and example, on the objects of education / health all schools in one district) taking into account opinion of specialists or administration of the region) experts of the Project Group
4. The procedures stipulated by the Rules of Compliance with the procedures provided for in The documentation must be adapted, taking into planning and implementation of PPP projects the Rules for planning and implementing PPP account the actual data on the objects, Tender approved by the order of MNE PK No. 725 dated projects approved by the order of the MNE PC Documentation and draft PPP Contract are used November 25, 2015 through a tender applying No. 725 of November 25, 2015 and identification taking into account the Rules dated November 25, simplified procedures are used of Private Partne 2015 No. 724 and recommendations of UNDP-GEF Consultants
GENERAL RECOMMENDATIONS
The key problem in planning PPP projects in the sphere of energy saving (on the example of standard projects) is the lack of sufficient information about facilities and basic data on technical and economic parameters of a facility/equipment. In this regard, it is recommended within the framework of Complex Plans for each region to consider related measures for each sectoral management, to form a database that will contain information for decision-making, by both public and private partners; In order to obtain reliable data on the objects, it is necessary to solve problems with a quality energy audit, it is recommended to include these expenses in the cost of investment costs for PPP projects, and to clearly determine the choice of technologies, taking into account the ratio of "price and quality"; It is recommended during the preparation of applications to pay special attention to the collection of source data and parameters for potential projects, in addition, to more active involvement of experts in the sphere of energy saving, energy audit, etc.
UNDP-GEF and the RK Government Project «Sustainable cities for 31 low carbon development» UNDP-GEF: mechanism of financial support for energy service initiatives
In the end of 2017, within the framework of UNDP-GEF and the RK Government project “Sustainable Cities for Low-Carbon Development”, a mechanism of organizational and financial support was launched for the implementation of low-carbon urban initiatives, which is tested jointly with participation of MID RK, DAMU Entrepreneurship Development Fund JSC and UNDP through grants from the Global Environmental Facility (GEF).
For approbation of support, “Rules for provision financial assistance for the implementation ofa mechanism to stimulate investment in energy efficiency of municipal infrastructure of the Republic of Kazakhstan” were developed.
The mechanism supports representatives of small and medium-size businesses, as well as owners of facilities with the experience of energy services, through the provision of financial support to them in the implementation of energy-efficient municipal projects.
Support of low-carbon projects is to subsidize a loan for their implementation, namely, to cover a 10% bank rate of a commercial loan to improve financial indicators of the project and reduce its payback period. Thus, with an average bank loan rate of 15%, the rate for the recipient of financial support from UNDP will be about 5%, which is comparable to the rates for projects in OECD countries.
The slides below show in detail the mechanism of providing support to energy service urban initiatives.
UNDP-GEF and the RK Government Project 32 «Sustainable cities for low carbon development» UNDP in Kazakhstan Global Environmental Facility The Government of Kazakhstan
UNDP-GEF: mechanism of financial support of energy service initiatives
2018
Where to receive money for energy efficiency?
• Energy efficiency generates saving in payment for energy. • Energy efficiency can be the subject of investment project. • ESCO model is a classic form of investment project in the sphere of energy efficiency.
Model of shared savings Model of guaranteed savings
Customer (object owner) Access to regulated bank loan Available competence Public property - - Private property + -
UNDP-GEF and the RK Government Project «Sustainable cities for 33 low carbon development» tenge ESCO work model
80 Basic line Saving 60
40 27 27 27 57 57 57 5 5 5 5 5 5 20 25 25 25 25 25 25 0 -3 yearгод -2 yearгод -1 годyear 0 1 yearгод 2 yearгод 3 годyear 4 yearгод 5 yearгод … годyear -20 Basic line – Expenses of ESCO investments can be own and/or borrowed Customer for system -40 functioning (for example): • Payment for energy; -65 Return of ESCO investments at the expense of Customer’s saving • Minor and major repairs; -60 • Costs for maintenance, etc. -80 Guaranteed ESCO income at the expense of Customer service
инвестиции ЭСКО в заказчика потребл. энергии и сопутсв. расходы Заказчика сервисное обслуживание ЭСКО возмещение инвест. затрат ЭСКО
Supported energy efficient UNDP in Kazakhstan Global Environmental Facility projects The Government of Kazakhstan
Investments and/or replenishment of current assets (purchase and/or Assigned purpose construction and/or modernization and/or reconstruction and/or major of the project repair of fixed assets in energy efficiency of municipal infrastructure and settlements (A) Municipal heat supply; (B) Municipal water supply; Sectors of municipal (C) Public buildings and MRB; infrastructure (D) Municipal disposal facility; (E) Lighting (indoor and outdoor) Minimum level of energy saving: Requirements • 15% in А – D sectors to the project • 45% in E sector
Requirements to At least 2 years of experience in the sphere of energy saving and/or Applicant implementation of energy efficient projects
UNDP-GEF and the RK Government Project 34 «Sustainable cities for low carbon development» Conditions for subsidizing UNDP in Kazakhstan Global Environmental Facility fee rate of loans The Government of Kazakhstan
CREDIT AMOUNT RATE %↓ SUBSIDIES
Maximum amount of loan: Fee rate of loan liable to subsidizing: Amount of subsidy: Not more than 350 000 000 tenge Not more than 19% 10% from fee rate on loan
Loans are given only in tenge
OWN PARTICIPATION TERM REFINANCING
Own participation from project cost: Term of subsidy: Requirement to the term of not required 3 years with possible prolongation disbursement of refinanced loan: to 6 years Earlier disbursed by banks beginning from January 1, 2017
Is not liable The following persons Special to subsidy: cannot be UNDP project condition: participants: Loans which creditors are national institutes on approved projects by PSC, of development, national companies and Applicants whose share of state the bank reimburses earlier received fees, which rate was cheapened due to budget participation is more than 50%, charges, and/or other payments in current funds excluding PPP financial year
Mechanism of subsidy, guarantee provision
1. Applicant • Fills in application 5. Regulated bank • Decision on granting loan • Receipt of applications; 2. Secretariat • Checking completeness of 6. «Damu» Fund documents, analysis of complete • Signing a trilateral documents; agreement on grant and / or guarantee 3. Technical • Conducts technical assessment; • Payment of subsidy partner • Project evaluation and/or guarantee
• RPE; 4. PSC • JSFC; • MID; March 28, 2018 г. • ME; First meeting of PSC for • IFI; consideration of applications • NGO; • UNDP for financial support
Technical assessment
UNDP-GEF and the RK Government Project «Sustainable cities for 35 low carbon development» Business-Potential ESCO
Engineer and architectural companies Energy auditors Energy service companies
Equipment Contractor Energy producing Installers of producers organizations companies equipment
Energy suppliers Other specialists Construction Energy supplying in the sphere of companies companies energy
UNDP-GEF and the RK Government Project 36 «Sustainable cities for low carbon development» Rules for providing financial support to business («Green Subsidy»)
Pls see below the developed “Rules for provision of financial assistance to implement mechanism of investments promotion in energy efficiency of municipal infrastructure of the Republic of Kazakhstan”. We strongly recommend that you carefully read them before applying for a project competition for a grant.
APPROVED Agreed Agreed by the Resolution by the Ministry by the Resolution of SC of the Project of Investments and of Managing Board of the «Sustainable cities for Development of the «Damu» Entrepreneurship low-carbon development» Republic of Kazakhstan Development Fund» JSC
Rules for provision of financial support for implementation of the mechanism for stimulating investment in energy efficiency of the urban infrastructure of the Republic of Kazakhstan within the framework of the Joint Project «Sustainable Cities for Low-Carbon Development in Kazakhstan» of the Ministry of Investment and Development of the Republic of Kazakhstan and the United Nations Development Programme
1. General Provisions
1.1. These Rules provide financial support for the implementation of the mechanism for stimulating investment in the energy efficiency of the urban infrastructure of the Republic of Kazakhstan within the framework of the Joint Project of the Ministry of Investment and Development of the Republic of Kazakhstan and the United Nations Development Program «Sustainable Cities for Low-Carbon Development in Kazakhstan» (hereinafter the Rules). 1.2. The mechanism of stimulating investments in the energy efficiency of the urban infrastructure of the Republic of Kazakhstan is aimed at fulfilling the strategic tasks of the Republic of Kazakhstan in the field of energy efficiency, sustainable development and climate change, in particular: • Strategy «Kazakhstan-2050» concerning issues of environmental protection and use of natural resources; • Concepts for the transition of the Republic of Kazakhstan to the «Green Economy» in terms of energy conservation and energy efficiency; • «The Nation’s Plan - 100 Steps» in part of the implementation of Step No. 59 to stimulate the development of private energy service companies to provide a range of energy saving services with reimbursement of own expenses and obtaining financial profit from the actually achieved energy savings; • «Regional Development Programme 2020» with regard to the creation of market mechanisms for return on investment, with a goal to attract private capital, and stimulate public-private partnerships at infrastructure facilities.
UNDP-GEF and the RK Government Project «Sustainable cities for 37 low carbon development» 2. Definitions and abbreviations
The following basic concepts and abbreviations are used in these Rules: 1) Bank/STB is a legal entity, a commercial organization which, in accordance with the Law of the Republic of Kazakhstan «On Banks and Banking Activity in the Republic of Kazakhstan», is authorized to conduct banking activities, and also registered in the registration authorities of the Republic of Kazakhstan as a bank and has a valid license of the National Bank of the Republic of Kazakhstan to conduct banking operations 2) Guarantee is the Fund’s obligation to banks to repay the debt under the loan (credit) guaranteed by the Fund in the case that the borrower does not pay the amount under the loan agreement in the manner and terms established by the guarantee agreement 3) Urban infrastructure of the Republic of Kazakhstan is a set of enterprises (organizations), facilities (buildings and structures), utilities and networks of engineering and municipal services, to create normal conditions for people’s livelihoods, as well as the sustainable operation of production or circulation of goods and services in cities and settlements with population more than 2 000 people according to official statistics of the Republic of Kazakhstan; 4) Guarantee agreement is a tripartite written agreement concluded between a financial partner, a bank and an applicant for the provision of a guarantee. The form of the guarantee contract is approved by the Project Steering Committee; 5) Subsidy contract is a tripartite written agreement concluded between the financial partner, the bank and an applicant, under which the financial partner partially subsidizes the interest rate on the applicant’s loan issued by the bank. The form of the subsidy contract is approved by the Project Steering Committee; 6) The applicant is a legal entity, an individual – individual entrepreneur, with the exception of state enterprises and non-profit organizations, that has submitted an application for review of an investment project that meets the requirements provided for in these Rules; 7) Project is a project aimed at energy saving and energy efficiency improvement of the urban infrastructure facilities of the Republic of Kazakhstan, implemented through the acquisition and/or construction and/ or modernization and/or reconstruction and/or capital repairs of fixed assets, acquisition of biological and/or intangible assets including VAT costs) that meets the requirements provided for in these Rules; 8) Project Steering Committee (PSC) is a Committee for management of the UNDP-GEF and the Government of the Republic of Kazakhstan Project «Sustainable Cities for Low-Carbon Development». The committee is established on the basis of the project document signed on April 19, 2015, which decides whether or not to provide financial support mechanisms projects and includes one representative of the Ministry of Investments and Development of the RK, one representative of the Ministry of Energy of the RK, one representative of UNDP, one representative of the National Chamber of Entrepreneurs «Atameken», one representative of Kazakhstan Financiers Association, one representative of the public’s environmental organization; 9) International technical advisers are foreign experts contracted on tender basis (in compliance with the UNDP procedures) to assist a technical and financial partner and consider investment projects with it regarding the reliability of the presented calculations of the future energy savings and the completeness of the planned energy efficiency measures;
UNDP-GEF and the RK Government Project 38 «Sustainable cities for low carbon development» 10) The Mechanism\Facility is a mechanism for stimulating investment projects in the energy efficiency of infrastructure facilities in settlements of the Republic of Kazakhstan, implemented within the framework of these Rules; 11) UNDP-GEF Project is the UNDP and MID RK Project “Sustainable Cities for low-carbon development”; 12) Secretariat to support low-carbon projects (Secretariat) is an Implementation Team of the UNDP-GEF Project «Sustainable Cities for Low-Carbon Development», which is responsible within the framework of the implementation of the Mechanism for receiving, initial assessment and analysis of completeness of submitted applications for financial support, and providing a common support for the implementation of the Mechanism. The Secretariat does not have the right to vote and is not a part of the PSC; 13) Certificate is the decision of the Project Steering Committee to support the provision of financial support, drawn up in accordance with Annex 1-D to these Rules; 14) Subsidies is a kind of financial support used to partially recover the costs paid to a bank as a reward for loans in exchange for the fulfillment of certain conditions in the future; 15) Technical partner is a company defined by the UNDP Project, carries out a technical assessment of the announced investment projects, as well as verification of the results of the projects with respect to the reliability of the presented calculations/achieved results in terms of saving energy resources and completeness of planned/implemented activities; 16) Financing Partner/Fund – “Damu” Entrepreneurship Development Fund” JSC, being the Financial Partner and Administrator of funds granted by the United Nations Development Program-Global Environment Facility Project (hereinafter “the UNDP-GEF Project”) to support investment projects at the urban infrastructure facilities of the Republic of Kazakhstan within the framework of the Agreement between the Ministry of Investment and Development of the Republic of Kazakhstan (hereinafter “MID of the RK”) and JSC «Damu” Entrepreneurship Development Fund”. 17) Energy saving – activities aimed at the rational and economical use of fuel and energy resources; 18) Energy efficiency – efficient (rational) use of energy resources. Use of less energy to provide the same level of energy support for the operation of the facility(s).
3. Types and amount of financial support
3.1. Financial support for projects under the Mechanism can be provided for each new project in the form of a non-revolving line of credit, with the loan being granted for the following purposes: investment and / or replenishment of working capital. Financial support is provided in the form of the following instruments: • Subsidies in 10% of nominal rate of the second-tier bank in 19%. Herewith, the credits with nominal rate of return is equal or less 10% per annum are not subject to subsiding. • Guarantees for commercial loans for 50% of the loan amount by way of exclusivity. This support measure is applied for credits which are approved by the Steering Committee on 5 September 2018.
UNDP-GEF and the RK Government Project «Sustainable cities for 39 low carbon development» 3.2. Both types of financial support specified in paragraph 3.1. of these Rules may be granted for investment projects provided in subparagraph d) of Sub-clause 1) of Clause 4.2 of these Rules. On investment projects provided in subparagraphs a), b), c), e), f) of Sub-clause 1) of Clause 4.2. of these Rules, the applicant is entitled to apply for both types of financial support, but the Project Steering Committee has the right to support or deny both types of financial support, or to approve one at its own discretion. 3.3. The maximum loan amount of the announced investment project for receiving potential financial support provided under the Mechanism cannot exceed 350,000,000 Tenge equivalent to 1,069,845.64 (one million sixty nine thousand and eight hundred forty five) US dollars (at the current United Nations rate of exchange for the month of the conclusion of the Cooperation Agreement between the Ministry for Investments and Development of the Republic of Kazakhstan and JSC «DAMU» Entrepreneurship Development Fund» on the implementation of the mechanism for stimulating investment in the energy efficiency of urban infrastructure of the Republic of Kazakhstan in frames of the joint Project of the Ministry of Investment and Development of the Republic of Kazakhstan and the United Nations Development Program «Sustainable Cities for Low-Carbon Development in Kazakhstan») for projects. In this case, the final borrower must use the loan funds, regardless of the amount, by using non-cash forms of payments with suppliers / contractors / other contractors. Loans must be issued in the national currency of the Republic of Kazakhstan. 3.4. It is prohibited to provide a loan to a final borrower for reimbursement of expenses incurred earlier, repayment of financial assistance received from individuals and legal entities, including participants/ shareholders/officers of the ultimate borrower; 3.5. The decision to grant or not to provide financial support for projects within the framework of the Mechanism, as well as its types and terms, is taken by the Project Steering Committee on the basis of the documents provided by the applicant in the manner provided for in these Rules.
4. Requirements and criteria for evaluating the projects for financial support
4.1. Requirements to the Applicant for financial support: 1) A legal entity must be registered with the registration authorities of the Republic of Kazakhstan; 2) have civil legal capacity to enter into business contracts (certificate of state registration/re- registration, constituent documents); 3) to be solvent, not subject to liquidation, its property should not be seized, its financial and economic activities should not be suspended in accordance with the law (certificates confirming the absence of debts in serviced banks, tax and other authorities, financial statements for the last 2 (two) years preceding the year of applying for financial support); 4) a legal entity or its subcontractor (co-executor) should not be included in the list of unreliable taxpayers/the list of unreliable potential suppliers/the Register of Unfair Participants of Public Procurement/List of Enterprises/ The list of pseudo-enterprises according to the UN list (UN Security Council, UN Procurement Division and other UN disqualification lists); 5) have at least 2 years of experience in implementing the projects related to energy conservation and energy efficiency improvement before the date of submission of the application for consideration to the Secretariat, confirmed in an acceptable way.
UNDP-GEF and the RK Government Project 40 «Sustainable cities for low carbon development» 6) the absence of the applicant company on the list of the UN Security Council 1267/1989, the list of the UN Procurement Division or other UN disqualification lists. 4.2. Criteria for the evaluation of investment projects for obtaining financial support under the Mechanism: 1) the investment project should be implemented exclusively at the facilities of the urban infrastructure of the Republic of Kazakhstan, namely, at one or several of the following objects (facilities): a) urban heating supply; b) urban water supply; c) in public buildings; d) in multi-apartment buildings, including blocked houses, which are not completely autonomous; e) urban sewage and treatment systems; f) street and indoor lighting, g) other facilities of municipal infrastructure by the Resolution of the Steering Committee. 2) the project during the implementation period should reach at least: - 15% reduction in energy consumption at the facilities specified in subparagraphs a) to e) of Sub-cluase 1) of Clause 4.2. of these Rules, and not less than 45% at the facilities specified in subparagraph f) of Sub-clause 1) of Clause 4.2 of these Rules, from the baseline adopted for the basis of one of the following schemes: a) on the actual energy consumption based on the readings of heat and/or electric energy meters averaged for the specified period (month/quarter/half-year/ year/3-5 years), sufficient for an objective assessment of the level excluding the influence of weather and other factors. b) for estimated energy consumption for the specified period (month/quarter/half-year/year/3-5 years), based on existing norms, SNIPs (Regulatory and technical documentation is presented on the basis of the «List of normative legal and regulatory acts in the field of architecture, town-planning and construction, operating on the territory of the Republic of Kazakhstan) and other normative documents. Note: the choice of the scheme for determining the baseline is determined by the actual situation at the project site/facilities on the basis of a preliminary survey by the Applicant. 3) the investment project must guarantee compliance with the existing norms of the Republic of Kazakhstan, SNIPs and other regulatory documents of the Republic of Kazakhstan that determine the necessary light, heat and other regime at the site/s where the project is being implemented. 4.3. Credits are not subject to subsidizing and guaranteeing: – in which the creditors are national development institutions and organizations; – which are aimed to perform the commitments by procurement procedures results of international and governmental organizations\enterprises; – the rate of remuneration for which was reduced by budgetary funds. Participants of the UNDP Project cannot be following Applicants: 1) implementing projects that provide production or supply of weapons (including components for the production of weapons), narcotic substances or other property withdrawn from civil traffic;
UNDP-GEF and the RK Government Project «Sustainable cities for 41 low carbon development» 2) Implementing projects that provide for the organization and (or) development of the gambling business; 3) implementing projects that foresee activities related to terrorist and any other activities prohibited by the legislation of the Republic of Kazakhstan; 4) implementing projects that provide release and wholesale of excisable goods or products, with the exception of projects providing production of motor vehicles; 5) which founders (including participants, shareholders) are national management holdings, national holdings, national companies and organizations, fifty and more percent of shares (participatory interests in the authorized capital) of which are directly or indirectly owned by the state, the national managing holding, the national holding, national company (with the exception of entrepreneurs established under the public-private partnership agreement); 6) non-profit organizations; 7) state enterprises, including those based on the right of economic management or being a state enterprise. 4.4. The term of subsidizing for loans is 3 (three) years with the possibility of extension to 6 (six) years by the decision of the Project Steering Committee. In the case when several subsidy agreements are concluded for one project, the total period of subsidization is established from the moment the financial partner signs the first subsidy contract. The term of the subsidy contract after 3 (three) years is extended on the basis of the Applicant’s application to the Secretariat only with the availability of funds for subsidizing in the UNDP project at the time of consideration of such a petition. In case of prolongation of the current subsidy contract, the Applicant must submit an application for extending the term of the subsidy contract to the Secretariat no later than 90 calendar days before the expiry of the term of the subsidy contract. If a positive decision is taken by the Project Steering Committee, the period for the subsidy begins after the end of the current subsidy contract. The decision on prolongation/non-renewal of the current subsidy contract should be made 45 calendar days before the expiration of the subsidization contract. 4.5. The guarantee period for loans is 3 (three) years without the possibility of prolongation. 4.6. Subsidies are also subject to loans aimed at refinancing loans previously issued by banks beginning on January 1, 2017 and meeting the criteria of the Rules. 4.7. Guarantees are not subject to loans aimed at refinancing. 4.8. The applicant’s projects, which have been approved by the Project Steering Committee for the subsidy tool, can be refinanced in other banks on previously approved subsidy conditions. 4.9. At the same time, if the loan, which was refinanced, was previously subsidized, then the term of subsidization is established from the moment the financial partner signs the first contract of subsidization in the original lending bank. 4.10. If the Project Steering Committee decides to subsidize the current loan, the bank reimburses the applicant for the commission, fees and/or other payments received earlier in the current financial year.
UNDP-GEF and the RK Government Project 42 «Sustainable cities for low carbon development» 4.11. Under the Rules, the Bank does not charge any fees, fees and / or other payments related to the loan, except for: 1) associated with the change in credit conditions initiated by the Applicant; 2) charged for the reason of violation by the Applicant of the obligations under the loan. 4.12. If the Project Steering Committee decides to subsidize the current loan, the Bank reimburses the Applicant for the commission, fees and / or other payments received earlier in the current financial year. 4.13. Guaranteeing is granted only for new loans.
5. The procedure for submission and review of applications for financial support of investment projects
5.1. In accordance with clause 5.5 of these Rules, a potential applicant can apply for financial support in the form according to Annex 1-A to these Rules. 5.2. These Rules apply to new projects, as well as projects that received a bank loan after January 1, 2017. 5.3. The completed application is accompanied by: 1) information on work experience and qualifications in accordance with Appendix 1-B, to these Rules; 2) description of the project planned for implementation, describing technical and technological solutions in accordance with Annex 1-B, to these Rules; Applications and attached documents must be stitched, numbered and signed by the first manager or a person appropriately authorized to sign the application and attached documents (a copy of the power of attorney must be attached). 5.4. The applicant’s project must have the potential to save energy and reduce greenhouse gas emissions
of CO2. At the same time, in order to prevent the fragmentation of the project amount exceeding the limit specified in Clause 3.3 of these Rules for smaller ones, it is not allowed to submit several applications by one applicant and/or affiliates with one project having similar conditions and terms of implementation. 5.5. The announcement of the beginning of the receipt of applications is published on the initiative of the Fund at the expense of the UNDP Project in the national print media with a circulation of at least 100,000 (one hundred thousand) copies in the state and Russian languages, and a similar ad is posted on the official Internet portal:www.eep.kz and www.damu.kz. The announcement specifies the deadline for applications, the place where applications are received, the language of the application, the timing of the meeting of the Project Steering Committee, as well as information on the available limits for 1 (one) project of the corresponding quarter in Tenge, the considered urban sectors, provided financial support measures, provided requirements for the potential of energy saving from the implementation of the investment project, contact information. Terms of the announcement are subject to be approved by the Fund and the UNDP Project. 5.6. All applications are accepted by the Secretariat.
UNDP-GEF and the RK Government Project «Sustainable cities for 43 low carbon development»
5.7. The competence of the Secretariat includes: 1) Call of applications of potential applicants for receiving financial support measures; 2) refinement of completeness of applications with applicants; 3) sending the applications for consideration to the Technical Partner; 4) submission of applications reviewed by the Technical Partner, for consideration by the Project Steering Committee; 5) keeping the minutes of the meetings of the Project Steering Committee, 6) issue a Certificate to the Applicant. 5.8. Applications of potential applicants are accepted on paper and electronic media at the location of the Secretariat by hand or by post. 5.9. Call and check of completeness of applications by the Secretariat are made within 5 working days. In order to eliminate insignificant inconsistencies or omissions relating to documentation requirements identified in the application, the Secretariat may require, by requesting the applicant’s e-mail indicated in his application, to provide the missing and/or additional information or documentation for additional terms but not more than 5 (five) working days. Such shortcomings should in no way be related to any aspect of the costs of project. 5.10. The Secretariat has the right to reject the application, recognizing it as not meeting the requirements established by the Rules. 5.11. Within 3 (three) working days from the time of refinement of completeness of the application, the Secretariat sends applications for consideration to the Technical Partner. 5.12. The technical partner reviews applications received from the Secretariat within 5 (five) working days. The technical partner evaluates the declared technical and technological solutions that are planned to be applied in the project and confirms or does not confirm the declared level of energy saving (technical assessment and verification of the project). If it is necessary to obtain additional necessary information from the applicants, the Technical Partner shall contact the Secretariat, which, in turn, sends an electronic request to the applicant. In this case, the period for consideration of applications can be extended for the period of request and receipt of necessary information, but should not exceed a period of more than 10 (ten) working days. 5.13. The conclusion of Technical Partner shall be made in writing and sent to the Secretariat within 5 (five) working days from the date of receipt of applications from the Secretariat. The term of submission of the opinion by the Technical Partner may be extended for a period not exceeding 10 (ten) working days in the case provided for in paragraph 5.12. of these Rules. In the case when additional information is not provided by the applicants, the Technical Partner within the prescribed time limit shall issue a conclusion to the Secretariat, taking into account the available data and a note on non-provision of information. 5.14. The Secretariat shall convene the Project Steering Committee at least once per Quarter, subject to the availability of applications with the conclusions of the Technical Partner and/or other matters specified in these Rules.
UNDP-GEF and the RK Government Project 44 «Sustainable cities for low carbon development» 5.15. The decision to grant or not to provide financial support mechanisms is made by the Project Steering Committee with a quorum of 2/3 of the total number of its members. The minutes of the meeting of the Project Steering Committee are kept by the Secretariat, which does not have the right to vote. 5.16. The Project Steering Committee has the right to accept or reject the application, recognizing it as not meeting the requirements established by the Rules, and the PMC will not bear any responsibility or obligation to inform the relevant applicant(s) about the reasons for such a decision. 5.17. The minutes of the meeting of the Project Steering Committee shall be made by the Secretariat within 5 (five) working days from the date of the meeting of the Project Steering Committee. Applicants to whom there has made a decision to provide financial support, the Secretariat sends the Certificate within three (3) working days after signing the minutes of the meeting of the Project Steering Committee, with a duplication to its financial partner. The validity of the Certificate is 1 (one) year. 5.18. After receiving the Certificate, the applicant applies to the bank with an application for a new loan, during the validity period of the certificate. 5.19. The Bank independently, in accordance with the procedure established by the internal documents of the second-tier bank, considers the application of the Applicant provided that the applicant receives financial support indicated in the Certificate.
6. The mechanism of subsidizing
6.1. After the bank receives from the applicant the required information for obtaining a loan in accordance with the requirements established by the bank and with a positive decision/approval of the loan, a subsidy contract is concluded between the financial partner, the bank and the applicant, according to which the financial partner pays part of the interest rate to the bank, in accordance with the schedule repayment to the bank loan agreement and in accordance with the terms of the subsidy agreement. 6.2. The bank under the current loan is obliged to write off fines and penalties before the signing of the subsidy agreement for failure to fulfill the obligations by the applicant for the timely repayment of the principal debt and the remuneration stipulated in the bank loan agreement, and for new/current loans the bank accepts obligations not to charge or install for the applicant commission, fees and/ or other payments related to the loan, with the exception of: 1) associated with changes in credit conditions initiated by the applicant; 2) levied for the reason of violation by the applicant of obligations under the loan. In the presence of the fact of withholding of commissions, fees and or other payments on existing loans, except for the cases specified in sub-paragraphs 1),2), the Bank is obliged to return to the Borrower any arrests. 6.3. The subsidy contract is signed in the following order: 1) The bank: within 5 (five) working days from the date of receipt of the positive decision/approval of the loan. 2) Financial partner: within 3 (three) working days from the receipt of the subsidy contract from the bank
UNDP-GEF and the RK Government Project «Sustainable cities for 45 low carbon development» 6.4. If the bank does not make a timely contract for subsidies within the timeframe established in subparagraph 1) of paragraph 6.3 of the Rules, the bank notifies the financial partner and the Secretariat with an official letter explaining the reasons for the delay. 6.5. In the case that the terms of the bank loan agreement and/or the subsidy agreement do not comply with the decision of the Project Steering Committee and/or the conditions of the Rules, the financial partner does not sign the subsidy contract. At the same time, the financial partner notifies the Secretariat, the bank and the applicant within 3 (three) working days from the date of such decision. 6.6. If the applicant and the bank eliminate the remarks, the financial partner signs the subsidy contract within 3 (three) working days from the moment of elimination of the comments. 6.7. If the applicant and the bank disagree with the comments of the financial partner, the financial partner through the Secretariat submits this issue to the Project Steering Committee for a final decision. 6.8. The Subsidy Contract shall come into force from the date of its last signing by the applicant, the bank and the financial partner. At the same time, the beginning of the period of subsidization can be established in the subsidy contract for no more than 30 (thirty) calendar days before the date of signing the subsidy contract by the financial partner. 6.9. The date of payment of the subsidized portion of the rate of remuneration is determined by the applicant and the bank independently. In the event that the accrual of interest on a loan begins on the day following the date of signing the Applicant’s contract of subsidizing, the bank does not include into subsiding period a day of subsidy contract signing. After the conclusion of the subsidy contract, the Financial Partner sends the appropriate notification to the UNDP Project on concluding the subsidy agreement specifying the information on the amount of funds for subsidizing. After the receipt of notification from the Financial Partner UNDP project carries out: – reservation of funds for further transfer to the Financial Partner for the obligations undertaken before the end of the term of the subsidy, in the amount specified in the letter; – a one-time transfer of the remuneration to the Financial Partner from the amount allocated for the subsidy specified in the subsidy agreement that is not subject to return in accordance with Article 8 of the Cooperation Agreement between the Ministry of Investment and Development of the Republic of Kazakhstan and JSC «DAMU» Entrepreneurship Development Fund» for the implementation of the mechanism stimulating investments in energy efficiency of urban infrastructure of the Republic of Kazakhstan within the framework of the Joint Project of the Ministry of Investments and Development of the Republic of Kazakhstan and the United Nations Development Program «Sustainable Cities for Low-Carbon Development in Kazakhstan», concluded on August 28, 2017 (hereafter - «Agreement»). 6.10. The financial partner pays subsidies after signing the subsidy contract. Subsidies are paid subject to the availability of funds transferred from the UNDP Project. The procedure for transferring funds is specified in Sections 6 and 8 of this Regulation. 6.11. In order to transfer the amounts of subsidies under the concluded subsidy agreements to the financial partner, the current (special) account in the second-tier bank is opened. 6.12. At the request of the Financial Partner to the UNDP Project for the transfer of funds for obligations under subsidiary contracts in the first half of the current fiscal year, the UNDP Project within 10 (ten) business days from the date of circulation makes the first transfer in the current fiscal year
UNDP-GEF and the RK Government Project 46 «Sustainable cities for low carbon development» to the Financial Partner of the funds in the amount of the subsidy obligation for contract for the next 6 months. The second payment in the current financial year is carried out by the UNDP Project in accordance with the statement of the Financial Partner in the amount of the obligations under the subsidy agreement until December 31 of the current financial year after the financial partner submits reports on the development of the first payment for the first and / or second quarter of the current financial year no later than the 10th day of the month following the report in accordance with the Annex specified in the Agreement. 6.12-1. When the Financial Partner applies to the UNDP Project for the funds transfer under obligations of subsidy contracts in the second half of the current fiscal year, UNDP Project within 10 (ten) business days from the date of circulation transfers funds to the Financial Partner of the funds in the amount of the obligations under the subsidy agreement until December 31 of the current financial year. 6.12-2. The request of the Financial Partner to transfer funds to the subsequent financial year is made upon the request of the Financial Partner by December 31 of the current financial year. The UNDP project transfer the funds in the order specified in paragraph 6.12. At the same time, for the transfer of funds, the date of circulation of the Financial Partner is December 31 of the current financial year. 6.12-3. Financial statement for the current financial year in accordance with the Annex specified in the Agreement, the Financial Partner shall submit to the UNDP Project no later than January 10, the following fiscal year. 6.13. The transfer of funds for subsidization is made by the financial partner to the current account (special) in the second-tier bank on a monthly basis in advance, taking into account the schedule of payments to the subsidy contract. In this case, after the transfer of funds, the financial partner simultaneously notifies the bank by sending a copy of the document on the transfer of funds via e-mail. The notification shall indicate the name of the second-tier bank, the region, the name of the applicant, the amount of subsidies and the period for which the payment was made. 6.14. The second-level bank writes off the amount of subsidies for the applicants’ projects from the current (special) account of the financial partner on the basis of notification of the financial partner. The Bank does not have the right to debit from the current cash balances on the current accounts of the Financial Partner. 6.15. Payment of remuneration to the second-tier bank in respect of the unsubsidized interest rate is made by the applicant according to the repayment schedule in accordance with the subsidy agreement. 6.16. Upon the fact that the applicant has paid the full payment of the loan (the principal debt and the unsubsidized portion of the interest rate), the second-tier bank charges money from the current account of the financial partner to pay off the subsidized portion of the interest rate on the applicant’s loan. In case of cancellation of the amount of subsidies from the current account of the financial partner for the repayment of the subsidized portion of the interest rate after 30 calendar days from the date of the actual repayment by the applicant of the planned payment for the loan, the second- tier bank pays a financial penalty of 100 MCI to the financial partner. 6.17. The Bank does not make a withdrawal from the current account of the Financial Partner for repayment of the subsidized portion of the interest rate to the repayment of the debt by the Applicant and notifies the Financial Partner thereof within 2 (two) business days in the cases of failure by the Applicant, within three (3) payment of payments to the Bank.
UNDP-GEF and the RK Government Project «Sustainable cities for 47 low carbon development»
In case of failure to notify / notify after 30 calendar days from the date of occurrence of the cases provided for in this paragraph, the Bank shall pay to the Financial Partner a fine of 100 MCI. 6.18. Second-tier banks quarterly up to the 10th day of the month following the reporting quarter send a report on the subsidy to the Financial Partner in accordance with the form 2-A to this Regulation. 6.19. The financial partner after receiving a second-level report from the bank on the subsidy performs a review of the calculation of the remuneration and paid-up funds to the bank. 6.20. The financial partner shall send a quarterly report to the Secretariat on a quarterly basis, by the 25th day of the month following the reporting month, in accordance with the form in accordance with Appendix 2-B to these Regulations. 6.21. The financial partner sends a monthly report on the forecast balance of funds to the Secretariat on the 25th day, due to which it is possible to subsidize new projects. 6.22. In accordance with the terms of the bank loan agreement of the applicant and the Minutes of the Project Steering Committee, the financial partner has the right to transfer subsidies in terms of the subsidized rate of interest on the applicant’s loan, whereby the second-tier bank is granted a grace period / grace period for the unsubsidized portion of the interest rate and / or repayment of principal. In this case, the grace period/deferral period should be specified in the Resolution of the Project Steering Committee. 6.23. If the second-tier bank changes the terms (interest rate, grace period/deferral for payment of payments, repayment date, change of the Applicant’s name / transfer of debt) of the current bank loan agreement, the Bank sends a corresponding notification to the Financial Partner, which, in turn, Within 5 (five) working days through the Secretariat, the Project Steering Committee submits information on changes in conditions to the current financing terms, with the full package documents. The Secretariat, at the same time, forms the issue on the agenda, determines the date, time and place of the meeting of the Project Steering Committee, which notifies all its members. Based on the results of the discussion, the Project Steering Committee decides on the possibility / impossibility of making changes to the current financing terms, which is formalized by the protocol within 2 (two) business days from the date of the meeting of the Project Steering Committee. At the same time, the changes made to the financing conditions must be clearly reflected in the Minutes. 6.24. The funds allocated for subsidies under the UNDP Project and not used by the Financial Partner in the current financial year can be used in the next financial year to subsidize projects, including those approved in the next financial year.
7. The procedure for suspension, termination and resumption of subsidies
7.1. The decision on the termination and resumption of subsidies is made by the Project Steering Committee on the basis of the requests (notices) of the Financial Partner and /or the Technical Partner; 7.2. The financial partner suspends, and the Project Steering Committee decides to terminate the subsidy of the applicant when establishing the following facts: 1) misuse of a new loan, which is subsidized;
UNDP-GEF and the RK Government Project 48 «Sustainable cities for low carbon development» 2) inconsistencies between the project and / or the applicant with the terms of the Rules and / or the decision of the Project Steering Committee; 3) the applicant’s failure to fulfill within three (3) consecutive months the obligations to pay payments to the second-tier bank according to the payment schedule, to the bank loan agreement; 4) arrest of the applicant’s accounts; 5) failure to fulfill the obligations of the applicant to achieve the indicators of energy consumption reduction according to the criteria specified in subparagraph 2 of clause 4.2 of these Regulations. 7.3. In the case of suspension of subsidy payments, the Financial Partner shall notify the second-tier bank, the applicant, the Secretariat, indicating the reasons for the suspension of the subsidy, within 5 (five) working days from the date of the decision. 7.4. The Secretariat, after receiving a letter from the Financial Partner to suspend the sponsorship of the applicant within 5 (five) working days, develops and forms an agenda, determines the date, time and place of the meeting of the Project Steering Committee, about what notifies all members. 7.5. The decision to terminate or resume the subsidy is taken by the Project Steering Committee. At the same time, the decision specifies the reason for the termination / renewal of the subsidy. 7.6. The termination or renewal of subsidies is made from the date of suspension of the subsidy by the financial partner. 7.7. The decision on the resumption of subsidies is made by the Project Steering Committee provided that the applicant prior to the meeting of the Project Steering Committee eliminates the reasons for the suspension of the subsidy. 7.8. The minutes of the meeting of the Project Steering Committee shall be made by the Secretariat within 5 (five) working days from the date of the meeting. The Secretariat shall send a copy of the protocol to the second-tier bank, the financial partner, within 3 (three) working days. 7.9. Renewal of the loan subsidy is allowed for the following reasons for the suspension of subsidies: 1) non-compliance of the project and/or the applicant with the terms of the Program and / or the Resolution of the Project Steering Committee; 2) the arrest of the applicant’s accounts; 3) failure by the applicant, within 3 (three) months in a row, of obligations to pay payments to a second-tier bank according to the payment schedule to the bank loan agreement; 4) failure to fulfill the obligations of the applicant to achieve indicators of energy consumption reduction according to the criteria specified in clause 4.2 of these Regulations. 7.10. When the Project Steering Committee makes a decision to renew the applicant’s subsidy, the Financial Partner notifies the Bank and the Applicant about the renewal of subsidy payments within 3 (three) business days from the date of the decision to resume the subsidy. At the same time, it makes payments of subsidies that it did not pay for the period of suspension. In the event of suspension of subsidies for the reasons specified in subparagraphs 3) of paragraph 7.2 of the Regulations, the Financial Partner shall pay subsidies that are payable from the date of the applicant’s expiry of the delay.
UNDP-GEF and the RK Government Project «Sustainable cities for 49 low carbon development» 7.11. When the Project Steering Committee takes a decision to stop subsidizing the applicant, the Financial Partner sends a notice of unilateral termination of the subsidy agreement to the applicant and the second-tier bank, indicating the date of termination of the subsidy contract and the reason for the termination. Renewal is not subject to loans for which there is a Resolution of the Project Steering Committee to terminate the subsidy of the applicant. 7.12. Grant payments are terminated, and the subsidy contract is recognized as terminated in the following cases: 1) full repayment of the loan by the applicant under a bank loan agreement with a second-tier bank. The date of the full repayment by the applicant of the loan will be considered the date of termination of the subsidy; 2) deciding on the termination of subsidies; 3) termination of the subsidy contract on the initiative of the applicant. 7.13. In the case of the termination of the subsidy, the second-tier bank has the right, under the existing loan, to establish earlier the terms of financing (including the fee rate, commissions, fees and / or other payments and other conditions) for the applicant. 7.14. In case of partial / full early repayment of the principal debt on the applicant’s loan, the second-tier bank notifies the financial partner of the fact of partial / full early repayment of the principal debt on the loan within 2 (two) business days. In case of failure to notify / notify after 30 calendar days from the partial / full early repayment of the principal by the applicant, the bank pays a financial penalty of 100 MCI to the financial partner. Simultaneously, in case of partial early repayment of the principal debt on the applicant’s loan, the second-tier bank, when concluding an additional agreement to the bank loan agreement, sends a copy of the supplementary agreement to the bank loan agreement to the financial partner with the attachment of the corresponding supplementary agreement to the subsidy contract with a change in the repayment schedule. 7.15. In the case of termination of the subsidy of the interest rate on the applicant’s loan, partial / full early repayment of the principal debt on the applicant’s loan, the second-tier bank shall submit a reconciliation report to the financial partner within 7 (seven) business days. At the same time, the Bank in the reconciliation statement indicates the amounts and dates of the actual write-off of subsidies, and the financial partner indicates the amounts and dates of transfers of subsidies. 7.16. Under the applicant’s loan, for which non-targeted use is revealed, the second-tier bank submits the documents to the financial partner with the attachment of documents confirming the fact of misuse of the loan.
8. Guarantee mechanism
8.1. The second-tier bank independently reviews the applicant’s application in accordance with the procedure established by the bank’s internal documents, conducts a comprehensive examination of the project, analyzes the documents submitted by the applicant, the financial status of the applicant,
UNDP-GEF and the RK Government Project 50 «Sustainable cities for low carbon development» assesses the collateral value of the applicant’s security based on the applicant’s assessment of the collateral, in case of insufficiency of the security, submits the project to the authorized body that implements the internal credit policy of the bank, for making a decision on the possibility of granting a loan for a partial guarantee of a financial partner, provided that there is a certificate from the Project Steering Committee. 8.2. If the positive decision is taken, the second level bank within 2 (two) business days from the date of decision-making by the authorized body implementing the internal credit policy of the second-tier bank provides the financial partner: 1) Letter with a positive decision on the possibility of lending with the calculation of the amount of the guarantee; 2) Certificate of the Project Steering Committee; 3) Necessary documents to consider the issue of granting a guarantee. 8.3. The financial partner within 10 working days after receiving and reviewing the documents on the possibility of lending with the calculation of the amount of the guarantee, and the necessary documents to consider the issue of providing a guarantee, submits the project to the authorized body of the financial partner for taking a decision on granting / not providing a guarantee. 8.4. If there are any remarks to the submitted documents and / or the need for additional information, the identified remarks and / or request for information are sent to the second-tier bankbythe financial partner to eliminate and / or provide information within 3 (three) business days. At the same time, the deadline for consideration of the documents mentioned above for the financial partner is renewed. 8.5. If a financial partner makes a positive / negative decision to grant (not provide) a guarantee, the financial partner sends a letter to the second-tier bank within two (2) business days with the decision of the financial partner on the possibility (impossibility) of guarantee. 8.6. If a negative decision is taken on the applicant’s project, the letter on such decision should reflect the reason for the negative decision. 8.7. The financial partner shall send a copy of the contract to the Secretariat within 5 (five) business days after the conclusion of the guarantee agreement. 8.8. After the conclusion of the guarantee contract, the financial partner sends a corresponding notification to the UNDP Project on conclusion of guarantee agreement. The UNDP Project, upon receipt of a notification from the financial partner on the conclusion of the guarantee agreement, will: - a one-time transfer of remuneration to the Financial Partner from the amount of the guarantee specified in the guarantee agreement that is not subject to return in accordance with Article 8 of the Cooperation Agreement between the Ministry of Investment and Development of the Republic of Kazakhstan and JSC «Damu» Entrepreneurs Development Fund» on the implementation of the incentive mechanism for investment in energy efficiency of the urban infrastructure of the Republic of Kazakhstan within the framework of the Joint Project of the Ministry of Investment and Development of the Republic of Kazakhstan and the United Nations Development Programme «Sustainable Cities for Low-Carbon Development in Kazakhstan», concluded on August 28, 2017;
UNDP-GEF and the RK Government Project «Sustainable cities for 51 low carbon development» - reserve the funds, in the amount indicated in the letter. Upon the occurrence of the guarantee event, the UNDP Project shall pay the amount specified in the notification to the financial partner within 5 banking days to the specified bank account. At the same time, the financial partner must notify the Secretariat within 10 working days about the possible upcoming payment. In case of untimely payment of obligations upon the occurrence of the guarantee event, the UNDP Project pays a penalty to the financial partner in the amount of 0.01% (zero point one percent) ofthe untimely paid amount for each day of delay.
9. Termination of the guarantee
9.1. In case of revealing the facts of misuse of the loan, failure to fulfill the conditions established by the financial partner’s decision, violations of the terms of the Rules and / or criteria specified in clause 4.2, the financial partner has the right to take the following measures: - reduction of the amount of the guarantee; - cancellation of th Guaranteeing is granted only for new loans guarantee, In the case of cancellation of the guarantee, the financial partner shall notify the Project Steering Committee, the bank and the applicant within 3 (three) business days about such a decision. The procedure for applying the measures specified in clause 9.1 of these Regulations are reflected in the Guarantee Agreement.
10. Monitoring of the implementation of the investment project
10.1 . In order to monitor the implementation of investment projects, the Secretariat may, upon expiry of 3 (three) months after the commissioning of the investment project, request, and the recipient of financial support to provide information containing the actual results of the investment project implementation in the form specified in Annex 3-A to these Regulations. 10.2. Information request is made 1 (one) time in 3 (three) months. If necessary, the technical partner has the right to visit the object / s of the applicant no more than 1 (one) time in half a year to verify the completeness and reliability of the information provided. 10.3. If there is a discrepancy in the actual (not lower) information provided with the indicators that were specified when applying for financial support, the Technical Partner is obliged to notify the Secretariat of the discrepancies found and to ask the applicant for an explanation of the reasons for the failure to fulfill the declared energy saving indicators followed by a written conclusion. 10.4. In case of discrepancies, the Secretariat forms a set of documents with the application of the Technical Partner’s conclusion for submission to the next meeting of the Project Steering Committee, which, after reviewing the submitted documents, decides whether to continue or refuse to continue providing financial support measures. The Resolution of the Project Steering Committee is communicated to the applicant and the Financial Partner within 3 (three) working days from the date of its adoption.
UNDP-GEF and the RK Government Project 52 «Sustainable cities for low carbon development» 10.5. The technical partner shall provide to the Secretariat on quarterly basis, on the 25th of the last month of the quarter, summary data on monitoring projects in accordance with Annex 3-B to these Regulations; 10.6. Credits that are paid off or subsidizing/guaranteeing of which is terminated upon the decision of the Project Steering Committee/ financial partner are not subjected to monitoring. 10.7. The Fund monitors the implementation of investment project, which includes: 1) monitoring of the targeted use of the new loan by the applicant, with whom the subsidy / guarantee contract was concluded on the basis of data and documents provided by the bank; 2) Monitoring of the applicant’s payment discipline on the basis of data provided by the bank; 3) Monitoring the compliance of the project and / or the applicant with the terms of the Regulations and / or the Resolution of the Project Steering Committee, with the exception of the technical characteristics that are carried out by the Technical Partner. 10.8. The financial partner shall provide to the Secretariat / on quarterly basis the 25th day of the last month of the quarter the summary data on the implementation of projects in the form provided in Appendix 3-B to these Regulations. 10.9. In order to carry out monitoring functions, the financial partner may request from the applicant and the bank the necessary documents and information relevant to the subject of monitoring, including a tax secret, to monitor the implementation of the project on-site. 10.10. The procedure and terms of monitoring, as well as reporting forms are established by the financial partner. 10.11. The financial partner on an annual basis until the 15th day of the month following the reporting year provides a monitoring report on the investment project to the Secretariat / and MIR RK.
11. Final Provisions
Amendments and additions to these Regulations can be made by written agreement with the Ministry of Investments and Development of the Republic of Kazakhstan and the Financial Partner.
UNDP-GEF and the RK Government Project «Sustainable cities for 53 low carbon development» Appendix 1-А
To Project Steering Committee From (further - applicant)
Application of a potential applicant
In accordance with the Rules for Providing Financial Support for Promoting Energy Efficiency Investments in Urban Infrastructure of the Republic of Kazakhstan, under the joint UNDP-GEF and the Ministry of Investment and Development of the Republic of Kazakhstan project «Sustainable Cities for Low-Carbon Development,» I ask you to initiate the issue for consideration by the interdepartmental commission, provision of support measures, as follows:
1. The areas of the project (tick the area)
а) urban heat supply; b) urban water supply; c) in public buildings; d) in multi-apartment buildings; e) urban sewage and treatment systems; f) street lighting;
2. Information about the participant
Name of applicant Data of the founder (s) Legal address Actual address Mailing address Date of state registration/re-registration Certificate of state registration / re-registration Activities Supervisory authority, holding company or parent company BIN Experience
UNDP-GEF and the RK Government Project 54 «Sustainable cities for low carbon development» 3. Management Chief\first manager
Full name Position Office/Home Tel. Year and place of birth No. of identity card Place of residence (actual) Registration Experience
Chief Accountant
Full name Office/Home telephones Year and place of birth No. of identity card Place of residence (actual) Registration Experience
The contact person
(Full name, position, telephone)
4. Owners (the founder, participants, for joint-stock companies - shareholders owning 5% or more percent of shares)
Name of legal entity\Full name % Legal address
UNDP-GEF and the RK Government Project «Sustainable cities for 55 low carbon development» 5. Information on current activities
Field (as per Common Classifier of Economic Activity) Subfield (as per Common Classifier of Economic Activity) Types of products and services Annual turnover Profit or loss on the last reporting date Actual number of employees ______women of them ______Name of the Project (short description) Place of project implementation (oblast, city) Number of workplaces
6. Information on bank accounts Bank details (indicate all current and savings accounts in all servicing banks): ______
7. Credit History All bank loans used in the course of the applicant’s work are indicated, both cancelled and unpaid at the present time.
Creditor Amount Issue date Terms of remuneration Principal Repayment term Date of actual repayment of repayment for the bank repayment terms loan agreement 1. 2.
8. Information on current loans Date and currency rate: ___ / ___
№ Bank Bank loan Interest rate, Currency Loan Balance of debt Loan end Purpose of agreement % of loan amount on principal, as of date the loan information the specified date (short (No., date) description) 1 2
UNDP-GEF and the RK Government Project 56 «Sustainable cities for low carbon development» 9. Information on participation in other government programs and measures of state support applied to the applicant
№ State program /State support measures Name of the State Development Additional Information Institute 1 2
10. Guarantees and consent The applicant confirms and warrants the following: 1. All data, information and documentation submitted (provided) or provided to the Secretariat together with this application, or at the request of the Secretariat, are true and fully valid on the date below, in the event of a change in such data, the applicant undertakes to notify the Secretariat immediately. 2. The Applicant undertakes to provide and disclose, at the request of the Secretariat, any information and documents containing the banking and commercial secrets requested within the framework of this application. 3. The applicant is warned about the responsibility for providing false, incomplete and / or unreliable information provided for by the legislation of the Republic of Kazakhstan. 4. The applicant confirms that his statutory competence allows him / her to submit this application to the person who signs this application. 5. The applicant agrees that if this data and information are unreliable, this application can be rejected at any stage when information confirming the unreliability of the data is revealed, and the Secretariat is entitled not to disclose the reasons for the rejection. 6. The applicant was warned that in the event of failure to provide the information requested for monitoring the implementation of the investment project under paragraph 10.1. The rules, the provision of financial support measures are terminated without the issue being submitted for consideration by the Project Steering Committee.
UNDP-GEF and the RK Government Project «Sustainable cities for 57 low carbon development» The applicant hereby agrees to the Secretariat that: 1. The Secretariat shall be entitled to provide the information, information and documents provided by the applicant to the interested third parties indicated in this application with a view to their verification and review. All the information contained in this application as well as all documents requested by the Secretariat are provided solely for obtaining support measures under the Rules for Providing Financial Support to Promote Investments in Energy Efficiency of Urban Infrastructure Facilities of the Republic of Kazakhstan within the framework of a joint UNDP-GEF project and the Ministry of Investment and Development of the Republic of Kazakhstan «Sustainable cities for low-carbon development» 2. The Secretariat reserves the right to verify any information reported by the applicant about itself, and the documents provided by the applicant and the original application will be kept by the Secretariat, even if support measures are not provided. 3. Acceptance by the Secretariat of this application for review, as well as the applicant’s possible costs (for the preparation of documents necessary for obtaining support measures, etc.) is not an obligation to provide the Project Steering Committee with measures to support or reimburse the costs incurred by the applicant.
11. Annexes (documents provided for by the Rules)
I hereby confirm that I have read the procedure for considering the provision of support measures and I will not have any further claims to the Secretariat.
(Full name) signature Date
UNDP-GEF and the RK Government Project 58 «Sustainable cities for low carbon development» Appendix 1-B
Information on work experience and qualifications
1. Name of applicant ______
2. The volume of similar services rendered over the past five years (if any)
Description of Name of customers and their Place and year of services The value of the contract, rendered services phone numbers rendering Tenge (may not be specified)
3. To provide services, the applicant has the following equipment (mechanisms, machinery):
Type of equipment Number of units Condition Own, leased (from whom), will be (machinery, machineries) available (new, good, bad) acquired (from whom)
4. Qualifications and experience of employees (employees are indicated, which the applicant considers necessary for the execution of the project
No. Full Name Position Period of service Qualification or Category, grade, class of Citizenship in services specialization by specialization (if any) business for this diploma, certificate competition and other educational documents
I confirm the reliability of all the information.
(Full name) signature Date
UNDP-GEF and the RK Government Project «Sustainable cities for 59 low carbon development» Appendix 1-C
Description of investment project planned for implementation with a description of technical and technological solutions
It is necessary to describe the technology used, the rationale for the chosen solution, to calculate the baseline (if necessary, to attach a survey report ), calculate the rationale for reducing energy consumption
UNDP-GEF and the RK Government Project 60 «Sustainable cities for low carbon development» Appendix 1-D
Certificate of financial support to implement the mechanism for stimulating the investments in energy efficiency of urban infrastructure in the Republic of Kazakhstan
Astana, __.__.201__
By the Resolution of the Project Steering Committee of the UNDP Project «Sustainable Cities for Low-Carbon Development» from ___ № ______(name of the applicant) at observance of conditions and requirements of the Bank of the second level and JSC «Entrepreneurship Development Fund» DAMU» in obtaining the borrowed funds, a measure of financial support for the implementation of the investment project is guaranteed ______(name of the applicant) in the urban sector - (specify from the following) a) urban heat supply; b) urban water supply; c) in public buildings; d) in multi-apartment buildings; e) urban sewage and treatment systems; f) street lighting. in the form of ______(indicate type/types of financial support) • Subsidies in the amount of 10% of the nominal rate of a second-tier bank not exceeding 19%; • Guarantees for commercial loans in the amount of 50% of the loan amount. For a period of three years for the purpose of reducing energy consumption/energy saving from the project implementation in the amount of ___%. The certificate is valid for one year from the date of issue.
UNDP-GEF and the RK Government Project «Sustainable cities for 61 low carbon development» Appendix 2-А
Format
Subsidy Report for the period from ______to ______
Bank name Place where the Name of IBAN BIN Bank loan Bank loan Loan private enterprise the private code* agreement agreement amount addresses enterprise No. date. (tranche) (tranche) (tranche)
1 2 3 4 5 6 7 8
Interest rate on loan Subsidy contract Subsidy contract The amount of subsidies The amount of (tranche) number date transferred by the subsidies written financial partner off over the for the period period
9 10 11 12 13
Number of days of overdue payments on the loan Detailing the target use of the loan (tranche)
14 15
Executive ______Full name (signature, stamp)
Responsible officer ______Full name (signature, stamp)
Note:
* The unique code of identification of the subsidy contract, generated by the banking system of the bank
UNDP-GEF and the RK Government Project 62 «Sustainable cities for low carbon development» Appendix 2-B
Report on Subsidizing in the Secretariat for the period from ______to ______
Name of the bank / The place where Name of the Bank loan Bank loan Loan amount development bank the private private enterprise agreement No. agreement (tranche) enterprise (tranche) date. addresses (tranche)
1 2 3 4 5 6
Interest rate on loan Subsidy contract Subsidy contract The amount of The amount of (tranche) number date subsidies transferred subsidies written off by the financial over the period partner for the period
7 8 9 10 11
UNDP-GEF and the RK Government Project «Sustainable cities for 63 low carbon development» Appendix 3-А
Actual results of execution of the project
Unit of measurement (indicate) Evaluation period (month, quarter, year)
Unit of Evaluation period № Name measurement 2 3 …. N 1 Estimated baseline energy consumption UoM 2.0 Standard rate energy consumption UoM 2.1 savings from the baseline % 2.2 tenge 3.0 Actual rate energy consumption UoM 3.1 savings from the baseline % 3.2 tenge 4.0 Deviation of actual energy consumption indicators from UoM estimated 4.1 savings % 4.2 tenge
By results of project implementation, the comfort life conditions of ______people, including ______women,______men, ______children have been improved.
Technical partner’s official ______Full name (signature)
For stamp
UNDP-GEF and the RK Government Project 64 «Sustainable cities for low carbon development» Appendix 3-B
Format Monitoring report of the Technical Partner
Indicator Tasks
Sub-project - Number of sub-projects considered evaluation - Number of approved sub-projects - Amount of financial support by the UNDP Project for approved projects - Total investments in the approved projects - Expected reduction of energy consumption and reduction of greenhouse gas emissions (per year and for each investment life cycle) - Number of project beneficiaries (cumulative and for each project disaggregated by gender)
Sub-project - Number of subprojects completed and verified confirmation - Amount of financial support by the UNDP Project for approved projects - Cumulative amount of investments (implemented) - Reduction of energy consumption and reduction of greenhouse gas emissions (per year and for each investment life cycle) Number of project beneficiaries (cumulative and for each project disaggregated by gender)
UNDP-GEF and the RK Government Project «Sustainable cities for 65 low carbon development» Appendix 3-C
Format Project Implementation Summary
Indicator Tasks
Monitoring of projects: Number of projects signed for implementation of support measures - Number of ongoing approved projects - Number of rejected projects - Volume of UNDP financial support for approved projects - Loan amount and remuneration amount for approved projects - Receipt to the budget of indirect payments due to project implementation - Number of created jobs (cumulatively by each project)
UNDP-GEF and the RK Government Project 66 «Sustainable cities for low carbon development» Appendix 4-А
List of documents to be submitted to the Financial Partner by the Bank/Applicant for the examination of the Applicant
1. General documents to be requested from the Bank:
№ Name of the document Form
1 Cover letter to the list of documents Original
2 The list of all documents available in the package The original signed by an authorized employee of the Bank of documents or the act of acceptance and transfer and stamped by the Bank of documents
3 Loan application to the Bank A copy verified with the original by an authorized person of the Bank
4 Decision of the authorized body of the Bank A copy verified with the original by an authorized person of on granting a loan under the guarantee of the the Bank Financial Partner, expert opinions of the Bank’s credit, collateral and legal management and risk management.
5 Financial documents of the Applicant as of the A copy verified with the original by an authorized person of beginning of the year and the last reporting date the Bank (with the breakdown of the accounts payable and receivables at the beginning of the year and the last reporting date, indicating the date of the debt, the planned maturity date and the subject of the debt, decoding of fixed assets, Inventory, decoding of other articles ) certified by the seal of the Applicant
6 Decoding of articles of the report on incomes and A copy verified with the original by an authorized person of expenses - the income from realization, the cost the Bank or the original price, expenses of the period, other incomes and expenses, the volume of the realized production in monetary and physical terms for the considered periods
7 Information from the servicing bank on the presence Original form of the bank (absence) of loan debts, on the turnover for the last 12 months, as well as settlement documents that were not paid on time (file number 2) as of the time of consideration of documents, including an indication of the full details of the servicing bank
8 Information on the availability of loan debts, Original including overdue loans from other financial institutions (with loans other than banks)
9 Certificate of absence (availability) of tax arrears Original and other mandatory payments to the budget, mandatory pension contributions and social contributions
UNDP-GEF and the RK Government Project «Sustainable cities for 67 low carbon development» 10 Information on all available accounts in second-tier Original banks
11 Licenses, patents, quotas, etc. (in the event that A copy verified with the original by an authorized person of the type of activity of the applicant is licensed or the Bank licensed to sell certain types of goods and services for which the borrowed funds are directed)
12 documents on the implementation of the Project A copy verified with the original by an authorized person of (if any) the Bank - contracts, contracts of sale, contracts of intent, contracts for work (with the application of a license to perform construction and installation works or other activities by the contractor), provision of services, certificates of work performed, invoices, etc.; - estimate for the planned works, the corresponding permit for construction and installation works (in case the loan is issued for use in construction, reconstruction, etc.), etc.; - any other documents used by the Bank within the framework of the project review.
13 Business-plan A copy verified with the original by an authorized person of the Bank
14 Current contracts if any Copies
15 Credit agreements, bank loan agreements with Copies repayment schedules (if there are existing loans)
16 Documents confirming the authority of the person Copies certified by the seal of the Bank (may be provided signing the Bank Loan Agreement, pledge and by the Bank at the time of conclusion of the Guarantee guarantee on behalf of the Bank. Agreement)
17 Tax return for the last fiscal year A copy certified by the seal of the Bank (СМСП if not the standard procedure for reviewing the Loan under the Guarantee)
The statute of limitations for financial statements should not exceed six months as of the date the Bank provided the package of documents. If there are affiliated / affiliated persons of the Applicant, similar documents are requested for the project (except for bank statements and documents for the Project).
UNDP-GEF and the RK Government Project 68 «Sustainable cities for low carbon development» 2. Documents defining the legal status and powers of the Applicant
№ Name of the document Form
1 Charter, amendments and additions to it A copy verified with the original by an authorized person of the Bank / Notarized copy
2 Certificate / certificate of state registration / Notarized copy / registration of a legal entity a certificate of state registration from the portal of the Electronic Government.
3 The decision of the authorized body of the Original or a copy, checked with the original by the authorized Applicant on the appointment of the first person of the Bank; manager
4 The document proving the identity of the person A copy verified with the original by an authorized person of the authorized to sign documents on behalf of the Bank / Notarized copy Applicant in the Bank and the Financial Partner, as well as documents confirming his authority
5 The decision of the authorized body of the A copy of the original in the form approved by the Bank Applicant, who took a decision on attracting a loan
6 Document with samples of signatures of the Original / notarized copy / Copy verified with the original by the first head, chief accountant and seal of the authorized person of the Bank Applicant;
7 Steering Committee Project certificate Original/notarized copy
1) If necessary, the Financial Partner may request additional documentation and information on the Project. 2) In the case of providing a document consisting of several pages, such a document should be stitched and numbered, or sealed with the signature of authorized persons and stamped on each sheet of the document. 3) The end users of the documents (with the exception of the consent of the Applicant for providing information to the credit bureau and obtaining a credit report) are the Financial Partner. 4) If there are affiliated / affiliated persons of the Project Applicant, similar documents are requested (except for bank statements and documents for the Project).
UNDP-GEF and the RK Government Project «Sustainable cities for 69 low carbon development» Examples of supported projects
1. Reconstruction of street lighting by replacing lamps to LED lights of Fedorovsky rural district of the Fedorovsky district of Kostanay region Expected quantitative and qualitative project results: • Replacement and installation of energy-saving (LED) lamps and lighting fixtures in the amount of 755 units; • Refusal to use mercury-containing lamps, 150-250 kW; • Expected energy saving due to measures made is 60%, which fulfills the condition (> 45%) or 255,500 kWh / year;
• The reduction of GHG emissions from this building will be about 254.2 tons in CO2 eq. per year; • Applicant’s warranty for providing comfort lighting for 6,459 people • Guaranteed proper maintenance and resource savings (utilities, recycling, maintenance)
2. Modernization and maintenance of the boiler house of the KSU «Lyceum School № 101 named after A. Muslimov in Kyzylorda Expected quantitative and qualitative project results: • Modernization of the school’s heating system, replacement of a diesel boiler to a gas one; • The expected energy saving due to measures done is 68%, which fulfills a condition (> 15%) or 1.745 Gcal / year;
• The reduction of GHG emissions from this building will be about 306.03 tons in CO2 eq. per year; • Guaranteed proper maintenance and resource savings (utilities, maintenance)
3. Construction of a new local boiler house with a capacity of 7.5 MW to replace the old one built in 1960 Expected quantitative and qualitative project results: • Construction of a new boiler house; • The expected energy saving due to measures done is 40%, which fulfills the condition (> 15%) or 7,585.2 Gkal / year;
• The reduction of GHG emissions from this boiler room will be about 3 004 tons in CO2 eq. per year; • Guaranteed proper maintenance and resource savings (utilities, maintenance).
4. Modernization and maintenance of a kindergarten boiler room in the Panfilovskiy district of Almaty region Expected quantitative and qualitative project results: • Modernization of the school’s heating system, replacement of a coal boiler with a gas one; • The expected energy saving due to measures done is 15%, which fulfills the condition (> 15%) or 171 Gcal / year;
UNDP-GEF and the RK Government Project 70 «Sustainable cities for low carbon development» • Reduction of GHG emissions will be about 70 tons in CO2 eq. per year; • Guaranteed proper maintenance and resource savings (utilities, maintenance).
5. Improving energy efficiency of educational building of Taraz Innovation and Humanitarian University Expected quantitative and qualitative project results: Saving of energy resources: heat energy – 266 Gcal / year, not less than 46%, electricity – not less than 40% water – not less than 20%
• The reduction of GHG emissions from this building will be about 432.6 tons in CO2 eq. per year; • Guaranteed proper maintenance and resource savings (utilities, maintenance).
6. Project on reduction of energy consumption – Repair of multifamily residential building (MRB) Expected quantitative and qualitative project results: Saving of electric power: 1.43 MWh / year, or 65%; Heat energy saving: Modernization of heating system – 165 Gcal / season or more than 22%; Thermal insulation of the building – 156 Gcal / season or more than 30%; Total savings can be as follows: heat energy – 321 Gcal / season; electric power – 1.43 MWh / year
• The reduction of GHG emissions from this building will be about 524 tons in CO2 eq. per year; • Guaranteed proper maintenance and resource savings (utilities, maintenance).
7. Modernization, operation and management of independent boiler houses Expected quantitative and qualitative project results: • Replacement and installation of energy-saving independent boiler houses 5 units; • Reduction of emission of pollutants into the atmosphere by 70%; • Expected saving after all conducted measures will account for 60.6% of current consumption • Applicant’s warranty to ensure a comfortable stay for 1 376 building visitors; • Guaranteed proper maintenance and resource savings (utilities).
UNDP-GEF and the RK Government Project «Sustainable cities for 71 low carbon development» 8. Modernization of street lighting by replacing lamps to LED fixtures in Suzakskiy district of Turkestan region Expected quantitative and qualitative project results: • Replacement and installation of energy-saving (LED) lamps and fixtures in the amount of 930 units; • Refusal to use mercury-containing lamps, 150-250 kW; • The expected energy saving due to measures done is 64%, which fulfills the condition (> 45%) or 572.190 kWh / year;
• Reduction of GHG emissions will be about 546.4 tons in CO2 eq. per year; • Guaranteed proper maintenance and resource savings (utilities, recycling, maintenance).
UNDP-GEF and the RK Government Project 72 «Sustainable cities for low carbon development» Frequently asked questions
1. Question: What cities participate in the Programme? Reply: All cities of the Republic of Kazakhstan fall under the action of the program, in the Program there are no restrictions related to the location of the city. For information, below is a list of cities of the Republic of Kazakhstan. At the same time, according to the latest changes, the program is valid for settlements of more than 2,000 people according to official statistics.
Astana Atyrau oblast Kostanai oblast Almaty Atyrau Arkalyk Akmola oblast Kulsary Zhitikara Atbasar East-Kazakhstan oblast Kostanai Derzhavinsk Ayagoz Lisakovsk Yereymentau Zaisan Rudny Esil Zyryanovsk Kyzylorda oblast Kokshetau Kurchatov Aral Makinsk Ridder Baikonyr Stepnogorsk Semei Kazalinsk Stepnyak Serebryansk Kyzylorda Shuchinsk Ust-Kamenogorsk Mangystau oblast Aktobe oblast Shar Aktau Aktobe Shemonaikha Zhanaozen Alga Zhambyl oblast Fort-Shevchenko Zhem Zhanatas Pavlodar oblast Kandyagash Karatau Aksu Temir Taraz Pavlodar Khromtau Shu Ekibastuz Shalkar West-Kazakhstan oblast North Kazakhstan oblast Emba Aksai Bulayevo Almaty oblast Uralsk Mamlyutka Esik Karagandy oblast Petropavlovsk Zharkent Abai Sergeyevka Kapshagai Balkhash Taiynsha Kaskelen Zhezkazgan South Kazakhstan oblast Sarkand Karagandy Arys Talgar Karazhal Zhetysai Taldykorgan Karkaralinsk Kentau Tekeli Priozersk Lengher Usharal Saran Saryagash Ushtobe Satpayev Turkestan Temirtau Shardara Shakhtinsk Shymkent
UNDP-GEF and the RK Government Project «Sustainable cities for 73 low carbon development» 2. Question: Is there a list of public buildings that are suitable for the Program? Reply: Public buildings are buildings which activity is aimed at serving the interests of population, i.e. under the Program, public buildings are buildings and facilities of public use, among them buildings and structures occupied by institutions of government and administration, including: buildings and premises of social security agencies, judicial bodies, public utilities, etc .; buildings of educational and medical institutions.
3. Question: Can service companies (Trading houses, mini-markets, etc.) be participants of UNDP Program, also act as a borrower in the Bank with the involvement of a contractor with experience of assembly work not less than 2 years? Reply: The concept of the Program is (see Introduction) to maintain public buildings which owners do not have access to debt financing (state, quasi-government structures) and have restricted, limited funding. As a rule, Trading houses, mini markets, etc., are privately owned, able to attract financing, generate cash flows and, as a result, are themselves able to finance energy modernization to reduce production costs.
4. Question: Why passenger transport activity cannot also be a part of UNDP Program? Reply: Due to the limit of the project being implemented. Mechanism of energy service contract is not applicable to transport systems under UNDP-GEF Project.
5. Question: What are the functions of the «Secretariat» with contact phone numbers, email addresses, and the procedure for applying through CSC; Reply: The competence of Secretariat includes: 1) receiving applications from potential applicants for financial support measures; 2) working out completeness of applications with applicants; 3) sending applications to Technical Partner for consideration; 4) submission of applications reviewed by Technical Partner for consideration to Project Steering Committee; 5) keeping minutes of meetings of Project Steering Committee, 6) issuance of Certificate to the Applicant.
Contact details: 010000, Astana, 14 Mambetov Str. tel: + 7 7172 69 65 44 (2614) fax: + 7 7172 69 65 44 (2610) mob: +7 702 220 05 95 e-mail: [email protected] The procedure for submitting applications through CSC is currently under consideration.
UNDP-GEF and the RK Government Project 74 «Sustainable cities for low carbon development» 6. Question: Is it possible to get several loans at 350 million tenge per a borrower for the implementation of one project, or perhaps for different projects? Reply: A loan limit of 350,000,000 tenge is provided for the implementation of one project, while the borrower can implement several projects, there is no limit on the number of projects.
7. Question: List of products and manufacturers which can be used for purchase for the project implementation under UNDP Program? Reply: Within the framework of the Program, the business itself decides which products and from which manufacturer to acquire in order to achieve the best energy saving indicators.
8. Question: Is it possible to acquire an operating business, with further modernization at the expense of loan funds under UNDP Program? Reply: The loan funds under UNDP program can only be used for energy modernization, the acquisition of the existing business under the Program is not provided.
9. Question: And explain the difference between (C) Public buildings and MRB, and (E) Lighting (indoor and outdoor), so if the ESCO company changes lighting in a public building, then under what category of minimum energy saving it falls, 15% or 45%? Reply: Indoor and outdoor lighting is singled out into separate category of municipal economy, although it is present inside public buildings and MRB, as technologies used in modernization of lighting minimally bring energy saving - 45%. When considering a project related to indoor lighting, the criterion of energy saving will be considered – 45%.
10. Question: Is there a list of energy service companies recommended by UNDP for participation in the Program? Reply: Any interested representative of energy-service business can take part in the Program. UNDP does not recommend companies.
11. Question: Is there a list of technical partners involved in providing an opinion on UNDP projects? Reply: Technical partner is a company identified by UNDP Project that performs a technical assessment of specified projects, as well as verification of project results for the reliability of presented calculations / results achieved in terms of energy saving and completeness of the planned / implemented activities. Interaction with Technical Partner through Secretariat.
UNDP-GEF and the RK Government Project «Sustainable cities for 75 low carbon development» 12. Question: Is preliminarily review a project possible in the regions before submitting an official application to UNDP Secretariat? Reply: A preliminary application to Secretariat is possible before official application for preliminary opinion and recommendations.
13. Question: According to the mechanism of subsidy provision, the Applicant first applies to UNDP Secretariat, and only then applies to the Bank. For example, if the applicant submitted an application to UNDP for a loan amount of 350.0 million tenge, and the Bank subsequently approved a smaller loan amount - for example, 300.0 million tenge, or vice versa, do you need to make changes to the previously approved decision of PSC? Reply: No, re-submission of application is not required, because when making a decision, PSC is guided by the decision of Technical Partner who recommends / or does not recommend the project on the basis of stated technical and technological decisions.
14. Question: Is it possible to subsidize UNDP projects with simultaneous reimbursement of remuneration from the local budget for PPP projects? For example, the Borrower receives a loan at a rate of 15% for servicing street lighting facilities, of which 5% will be reimbursed under a PPP contract from the local budget, 10% by UNDP? Reply: Yes, it is possible, the UNDP grant is aimed at stimulating and scaling energy saving projects, in this case, UNDP funds reduce the budget burden on the project.
15. Question: Is participation of UNDP and the customer and the contractor possible at the same time? For example, the Customer – school takes a loan to pay for service company services to install energy-saving lamps, where payment is provided after signing the certificate of completion, while the Contractor can simultaneously receive a loan to perform the ordered service (purchase of lamps)? Reply: The essence of energy service contract is that the customer (school) does not need loan financing, the Contractor attracts a loan for the purchase and modernization, and the Customer makes a return to the Contractor, at the expense of funds that will be saved after modernization.
16. Question: What are violations and sanctions to regulated banks and Fund under the Program? Reply: The responsibility of regulated bank about timely notification of Financial Partner – “Damu” Foundation and conditions is specified in paragraphs. 6.16, 6.17, 7.14 of the Rules.
UNDP-GEF and the RK Government Project 76 «Sustainable cities for low carbon development» 17. Question: Who will monitor projects signed within the framework of UNDP? Reply: Within the framework of the Program monitoring of projects by the following parties is considered: “Damu” Fund - targeted use, financial discipline, project cooperation of the Program; BWI – in accordance with the corporate rules of the Bank for monitoring loans; Secretariat – project co-operation energy saving criteria.
18. Question: What is the list of documents for submission to UNDP during submission of application? Reply: The list of documents for submission of application to UNDP is specified in the Rules, Appendices 1-А (Application of a potential applicant), 1-B (Information on work experience and qualifications), 1-C (Description of the project planned for the implementation of the description of technical and technological solutions) supporting documentation application.
19. Question: Is there a requirement for business subjectivity? Reply: The only requirement for a business is to confirm its and / or its partner experience, at least 2 years in the implementation of energy saving projects.
20. Question: Can business engaged in the construction and reconstruction of heating networks with application of materials that contribute to saving of heat energy participate in the project? Reply: it is possible if relationship of the parties conforms to the principles of energy service contract.
21. Question: Can private institutions of pre-school and school education planning to implement energy-saving projects for their own needs, without work experience in the sphere of energy services, participate in the Program? Reply: The program allows participation of the owners of objects of modernization. To confirm the work experience, the experience of the owner of the object and / or his partner is accepted.
UNDP-GEF and the RK Government Project «Sustainable cities for 77 low carbon development»