Page 149 - Low Carbon Development in China and India
P. 149
In the process of implementing the street lamp reconstruction project of Chang’an Town,
Dongguan, in Guangdong Province, the contractor of the project, a trade company
with limited liability, needed to purchase in bulk electricity-saving appliances from
an enterprise in Shenzhen. The contractor lacked procurement funds, and thus could
not carry out the bulk purchases. By adopting the buyer credit mode, the Industrial
Bank issued the energy-saving equipment manufacturer a special buyer credit line with
the contractor as the borrower. The loan was earmarked for purchasing the electricity-
saving appliances. The maximum loan period was not to exceed three years. The energy-
saving equipment manufacturer was responsible for a variety of after-sales services and
provide equipment repurchase guarantee during the repayment period. This did not only
support the client in its efforts to expand sales capacity but also improved the economic
benefits of the contractor and the local environmental quality.
Business processes of the fixed asset loans for energy saving and
emission reduction include business acceptance, due diligence,
professional accreditation, review and approval, contract signing,
loans issuance, after-loan management, etc. Though the energy saving
and environmental protection industry is one which enjoys strong
government support, risk assessment and control is also very critical.
According to the experience of the Industrial Bank, for professional
service projects for energy conservation and emission reduction, banks
should focus on whether the technical maturity, completeness of
service contracts for energy conservation and emission reduction and
the total project cost, and benefit allocation proportion are in line with
market conditions. For resource recycling projects, banks should focus
on market risks in terms of raw materials supply, technical maturity
and commercial operation conditions for comprehensive utilization
of resources, product quality and distribution channels, etc. For
exclusive production projects for energy saving and environmental
protection, banks should focus on avoiding blind investment due to
operations according to market concept, which leads to the risk of
overcapacity of exclusive products related to energy conservation and
environmental protection.
Working capital loans for energy saving and emission reduction
refers to loans issued by banks for operation and working capital
turnover of energy saving and emission reduction projects (Box 2.7).
The product differs from fixed asset loans for energy saving and
emission reduction in the use of the loans, namely that the loan is used
to invest in fixed assets or used to support liquidity.
114 Low Carbon Development in China and India
Dongguan, in Guangdong Province, the contractor of the project, a trade company
with limited liability, needed to purchase in bulk electricity-saving appliances from
an enterprise in Shenzhen. The contractor lacked procurement funds, and thus could
not carry out the bulk purchases. By adopting the buyer credit mode, the Industrial
Bank issued the energy-saving equipment manufacturer a special buyer credit line with
the contractor as the borrower. The loan was earmarked for purchasing the electricity-
saving appliances. The maximum loan period was not to exceed three years. The energy-
saving equipment manufacturer was responsible for a variety of after-sales services and
provide equipment repurchase guarantee during the repayment period. This did not only
support the client in its efforts to expand sales capacity but also improved the economic
benefits of the contractor and the local environmental quality.
Business processes of the fixed asset loans for energy saving and
emission reduction include business acceptance, due diligence,
professional accreditation, review and approval, contract signing,
loans issuance, after-loan management, etc. Though the energy saving
and environmental protection industry is one which enjoys strong
government support, risk assessment and control is also very critical.
According to the experience of the Industrial Bank, for professional
service projects for energy conservation and emission reduction, banks
should focus on whether the technical maturity, completeness of
service contracts for energy conservation and emission reduction and
the total project cost, and benefit allocation proportion are in line with
market conditions. For resource recycling projects, banks should focus
on market risks in terms of raw materials supply, technical maturity
and commercial operation conditions for comprehensive utilization
of resources, product quality and distribution channels, etc. For
exclusive production projects for energy saving and environmental
protection, banks should focus on avoiding blind investment due to
operations according to market concept, which leads to the risk of
overcapacity of exclusive products related to energy conservation and
environmental protection.
Working capital loans for energy saving and emission reduction
refers to loans issued by banks for operation and working capital
turnover of energy saving and emission reduction projects (Box 2.7).
The product differs from fixed asset loans for energy saving and
emission reduction in the use of the loans, namely that the loan is used
to invest in fixed assets or used to support liquidity.
114 Low Carbon Development in China and India
