private sector operations - aicep portugal global · private sector operations month year. 1....

ASIAN DEVELOPMENT BANKPrivate Sector Operations

Month Year

1. Overview of ADBa) Our Missionb) Regional Footprintc) Strategy

2. Overview of Private Sector Operationsa) Key Objectiveb) Value Additionc) Products and Servicesd) Key Sectorse) Approvals and Portfoliof) How to Work with PSODg) Approval Cycleh) Management Team

Table of Contents

OVERVIEW OF ADB

to help our developing member countriesreduce poverty and improve their quality of life

OUR MISSION

REGIONAL FOOTPRINT

- 67 members; 48 in the region- 40 borrowing members- Japan and the United States are

the two largest members

Tbilisi Georgia

BakuAzerbaijan

YerevanArmenia

AstanaKazakhstan

AshgabatTurkmenistan

AlmatyKazakhstan

BishkekKrygyz

TashkentUzbekistan

DushanbeTajikistan

KabulAfghanistan

IslamabadPakistan

New DelhiIndia

KathmanduNepal

ColomboSri Lanka

DhakaBangladesh

UlaanbaatarMongolia

BeijingChina

ManilaPhilippines

HanoiVietnam

Yangon

BangkokThailand

VientianeLao People’s

Democratic Republic

Phnom PenhCambodia

JakartaIndonesia Dili

Timor LestePort MoresbyPapua New Guinea

1966year of establishment

AAAS&P / Fitch Ratings

3,000+employees globally

32field offices

ADB HQADB Field OfficesADB/PSOD Field Offices

NARO: Washington, DC, USAERO : Frankfurt, GermanyPLCO : Sydney, Australia

TokyoJapan

Nay Pyi TawMyanmar

SuvaFiji Island

Bhutan

Brunei

Hong Kong

Malaysia

Singapore

Taiwan

Korea

STRATEGY 2020

Inclusive Growth

Environmentally Sustainable Growth

Regional Integration

ADB’s Long‐Term Strategic Framework

2008‐2020

10 priorities emphasized in the Mid‐Term Review of Strategy 20201) Poverty reduction and inclusive

economic growth2) Environment and climate change3) Regional cooperation and

integration4) Infrastructure development5) Middle‐income countries6) Private sector development and

operations7) Knowledge solutions8) Financial resources and partnership9) Delivering value for money in ADB10) Organizing to meet new challenges

OVERVIEW OF PRIVATE SECTOR OPERATIONS

Private Sector OpsSeeks to identify

commercially viable

transactions without sovereign guarantees

generate attractive financial returns

promote environmentally sustainable and inclusive economic growth

KEY OBJECTIVE

VALUE ADDITION

of deep experience in emerging economies

with extensive networkin the Asia and the Pacific

stamp of approval with governments, private

investors and lenders

50yearsone

s t o p s h o p

comprehensive financial solutions

enhance environmental, social, and governance standards

country risk mitigation, neutral broker with governments

co-financers

lead in project and financial structuring

exemption from currency conversion and remittance

restrictions, withholding taxes and provisioning requirements

explicit cover of risks for guaranteed banks

PRODUCTS AND SERVICES

Investment Products

Technical and Advisory

ServicesAsset

Management

• Debt to equity to guarantees

• Syndications• Trade finance• Treasury products• Risk management

• Technical assistance

• Safeguards• Corporate

governance

• Co-managed investments

• Co-general partner

• Concessional funding

Investment Products

Debt $10M - $250M+Typical terms• 7 years (corporate) to 15+ years (project)• LIBOR / ADB cost of fund in local currency + credit spread• Flexibility with respect to fixed, floating, amortizationWhen is it relevant?• Strong project and/or established company with large balance sheet,

strong cash flow• Possibility to mobilize cofinancing under B-loan or risk participation

Equity (inc PE) $2M - $75MTypical terms• 25% ownership maximum• Never the single largest investor• Board seat• Minority protection rights• Put on the parent companyWhen is it relevant?• Growing company in a pre-IPO or pre-trade sale situation

Guarantees $20M - $250M (PCG) $400M (PRG)

Typical terms• Partial Credit Guarantees: market based, fees are based off the

lenders’ margin• Political risk guarantees: market based, fees are based off the

reinsurance marketWhen is it relevant?• Where other lenders are more efficient than ADB in (i) mobilizing local

currency, (ii) reaching target customers (PCG), or extending tenors (PCG)

• In frontier markets (PRG)

• Debt to equity to guarantees

• Syndications• Trade finance• Treasury products• Risk management


Services

Technical andAdvisory Services

$100K - $1M

Typical terms• For project preparation

TA, reimbursable at closing

• For capacity development TA, non-reimbursable grant

When is it relevant?• For projects in need of

additional, (concessional) financial assistance



governance




Asset Management

Asset Management




Asset ManagementCo-managed InvestmentsTypical terms• Co‐investment portfolio program

involving ADB and one or several investors in debt, equity or guarantees generated by ADB

Co-general PartnerTypical terms• ADB participates as a general

partner (exceptionally), limited partner and investment committee member

Concessional FundingTypical terms• Long term loan at concessional

interest rate to be “blended” with ADB financing

• First loss cover• Preference for climate‐related

support by donorsWhen is it relevant?• For projects in need of additional,

concessional financial assistance


Services



governance

Leading Asia’s Private Sector Infrastructure Fund• $1.5 billion commitment from JICA managed by ADB• Dedicated cofinancing vehicle for private sector

infrastructure investments (debt to equity)• Parallel and concessional tranches

KEY SECTORS

Infrastructure &Natural Res

Health & EducationHealth & EducationAgribusiness

Finance & Capital Markets

Access to finance (rural, microfinance,

housing, SMEs, climate, inclusive business and gender mainstreaming),

insurance, digital finance, filling market

gaps via trade and supply chain

financing

Suppliers(pharmaceuticals,

medical equipment), Providers (hospitals, clinics), distributors (pharmacies, supply chain), e-health, and in person and online

education

Generation(particularly renewables),

transmission, distribution, water/waste, transport and

associated services (airports/airlines,

roads, ports/shipping, logistics, rail/rolling

stock), natural resources (oil/gas,

mining)

Inputs (seeds, irrigation, cold

storage), farming(crop, livestock,

dairy), processing(grains, meats,

packaging), distribution

(wholesale/retail markets)

2015-16 APPROVALSPeople’s Republic of China

Pakistan

India

Georgia TBC Bank Credo Bank FINCA Bank

IndusInd Bank Shapoorji Affordable Housing Green Energy Corridor & Grid Strengthening Mytrah Wind and Solar Power Development Simpa Off‐Grid Prepaid Solar Leasing RBL Bank PNB Housing Finance JFS Limited Debt Financing Au Financiers Limited ReNew Clean Energy

AccessBank FINCA Bank Shah Deniz Stage II Gas Field Expansion

Western Counties Water and Wastewater Mgmt SME Industrial Wastewater and Sludge Treatment CFPA Microfinance Yingda International Leasing for Healthcare Finance Sustainable Dairy Farming and Milk Safety Integrated Wastewater Management Inclusive and Sustainable Livestock Farming Urban and Rural Integration Water Distribution

Bangladesh BRAC Bank Eastern Bank Limited

Tiwi and MakBan Geothermal Climate Bonds 150 MW Burgos Wind Farm

Philippines

Myanmar Nationwide Telecommunications Myingyan Natural Gas Power Plant Yangon Urban Renewal and District Cooling Telecommunication Towers Infrastructure

Regional Distributed Energy Storage Solutions Microfinance Risk Participation & Guarantee Micro Credit Ratings International Creador Fund III VI (Vietnam Investments) Fund III, LP High‐Value Horticulture Development

Azerbaijan

Engro Fast Track LNG Regasification 102 MW Gulpur Hydropower Triconboston Wind Khushhali Bank

Hazelnut Value Chain Development BhutanKyrgyz Republic

Bai Tushum Bank

Sri Lanka LOLC Finance and LOLC Micro Credit Hatton National Bank

Thailand 260 MW Northeastern Thailand Wind Power Distributed Commercial Solar Power Grid‐Parity Rooftop Solar

Agribusiness Private Equity Energy – Renewable Transport Energy – Other Water Financial Institutions Other Info, Com and Telcom

Indonesia Tangguh LNG Expansion Muarah Lahoh Geothermal Power

Armenia FINCA Bank

Cambodia Cambodia Solar Power

By Sector ($9.3bn) Top 10 Exposures ($ million)

By Geography ($9.3bn) By Product ($9.3 billion)

Loans, $6,262 , 67%

Debt Securities, $151 , 2%

Equities, $1,023 , 11%

Guarantees, $1,880 , 20%Southeast Asia,

$2,749 , 29%

South Asia, $2,300 , 25%

East Asia, $1,869 , 20%

Central and West Asia, $1,456 , 16%

Regional, $941 , 10%

India 1,820 PRC 1,769 Regional 941 Indonesia 703 Viet Nam 652 Pakistan 624 Thailand 530 Azerbaijan 374Philippines 359 Myanmar 270 Total 8,042 % of Total Portfolio 86%

Finance, $4,034, 43%

Clean Energy, $1,906, 21%

Other Energy, $1,811, 19%

Water and Other Urban Infrastructure and Services, $542, 6%

Transport, $462, 5%

Agribusiness, $299, 3%

ICT, $150, 2% Industry and Trade, $111, 1%

Education, $1, 0%

PORTFOLIO (as of 31 December 2016)

DEVELOPMENT RESULTSResults from PSOD projects active in 2016:

2.6Mtons CO2/year

in GHG emissions reduced

Sustainable Growth

1Mmicrofinance / SME borrowers

of which 72% are women

Financial Inclusion

13.5 TWhpower produced,

enough to power 1.5 M homes

Access to Energy

5000Students enrolled

Local economy

132 M m3wastewater treated

$10.2Bgovernment revenues

via taxes paid

Government Revenues

48Kadditional jobs provided

Employment

197Ksmallholder/SME farmers with better livelihoods

Agricultural Support

Clean Water

HOW TO WORK WITH PSODEligible Transactions

Located in ADB’s developing member countries

ADB’s target sectors (infrastructure, financial sector, agribusiness, etc.) and themes (climate change, inclusive business, etc.)

Developmentally and commercially sound, with a clear business plan

Financing not directly guaranteed by the government

Clear financing or other need (safeguard support, risk coverage, etc.) from ADB

Willing to employ professional advisors (legal, technical, environment and social, etc.)

For equity investments, a Board seat for ADB and clear exit strategy

High demonstrational

value and replicability

Innovative (new technologies or ways of doing

business)

Highest integrity and

ethical standards

Crowding in commercial financing

The earlier, the better ” to approach PSODPSOD can • provide some help in project preparation and structuring, by,

for example, engaging with the government on the terms of concessions and other project contracts

• suggest financing plan options to fit the transaction’s needs, selecting from ADB’s variety of instruments and helping to attract financing from other parties

Essential that the transaction meets ADB’s environment and social standards, so best to involve ADB from the ESIA scoping stage

“

P

APPROVAL CYCLEStan

dard Deals

FAST Deals*

Review of business plan and financials

Internal peer review

Concept Review Committee’s review

Technical, commercial, legal and safeguards due diligence

Finalize term sheet

Formal risk rating

Disclose safeguards documents

Investment Committee review

President’s review

21‐day circulation to the Board for review

Board’s approval

Concept Review Due Diligence Final Review Board Approval

Review of business plan & financials

Initial risk rating

FAST Committee review

Technical, legal commercial, & safeguards due diligence

Finalize term sheet

Formal risk rating

Disclose safeguards documents

Investment Committee review

President’s approval

Early Review Due Diligence Final Review

1 2 3 4

1 2 3

Notes:(*) Any nonsovereign financing ≤$20 million for debt and ≤$10 million for equity. Other requirements apply (e.g. safeguards categorization).

MANAGEMENT TEAM

Infrastructure Finance 1

Michael BarrowDirector General

Projects in Central Asia, West Asia and

South Asia

Shantanu ChakrabortyDirector

Infrastructure Finance 2

Projects in East Asia, Southeast Asia and

the Pacific

VacantDirector

Financial Institutions

Non‐sovereign public and private financial

institutions

Christine EngstromDirector

Investment Funds & Special Initiatives

Private equity funds, special initiatives and asset mgmt

Janette Hall

Director

Agribusiness

Agribusiness, food security and safety

Martin LemoineHead

Portfolio Management

Portfolio mgmt, project admin and special accounts

Craig RobertsDirector

Guarantees and Syndications

Co‐financing operations and risk

transfers

Bart Raemaekers

Head

Transaction Support

Development effectiveness, safeguards and integrity matters

Mark KunzerDirector

Christopher ThiemeDeputy Director General

Kenji YuhakuSenior Advisor

CASE STUDIES

www.adb.org

Case Studies

MYA: Yangon Urban Renewal & District Cooling ProjectIND: Mytrah Wind and Solar Power Development

$ = US dollars

Client:Mytrah Energy (India) Limited.ADB Assistance: $175m loan in dollars or Indian rupees.Key Features:• MEIL is one of India’s fastest‐growing independent power producers from

renewable sources, with 580 megawatts of wind power capacity underoperations and 476MW of wind power capacity and 377 MW of solar powercapacity under development.

• The project involves development of 476 MW of wind power projects inAndhra Pradesh, Karnataka, Madhya Pradesh and Rajasthan and 100 MW ofsolar photovoltaic power projects in Punjab and Telangana.

• Acceleration and expansion of private sector investment, including foreigndirect investment in clean energy infrastructure in India.

• Portfolio approach is a way to achieve greater leverage of ADB’s funding(simultaneous financial close of several projects) and hence greaterdevelopment impact.

ADB’s Value Addition:• Support the Government of India’s efforts to develop renewable energy,

where the private sector is expected to play a major role.• Support the growth of a professionally managed renewable energy platform.• Facilitate simultaneous financial close of several projects to enable project

execution in a shorter timeframe.Date Approved: 22 March 2016.

2016 Case Studies

1

$ = US dollars

Client: Yoma Strategic Holdings, Mitsubishi Corporation, and Mitsubishi Estate.ADB Assistance: $85m direct loan, $20m equity, $35m B‐loan, and $35mpolitical risk guarantee.Key features:• This transaction is an additional financing to expand the project (originally

approved in 2014) which provides hotel, retail, office, and residential space inYangon.

• The project will reduce the acute shortage of business and tourisminfrastructure in Yangon, revitalize its emerging central business district, andhelp the city become more competitive and environmentally sustainable.

• The project includes the country’s first district cooling plant to reduce strainon Yangon’s electrical grid, reduce fuel consumption, and reducegreenhouse gas emissions.

ADB’s Value Addition:• ADB assistance is essential in reaching financial close, as local and

international banks are unable to undertake projects of this scope and scale inMyanmar without support from multilateral development banks.

• ADB’s assistance will facilitate the institutionalization of high environmentaland social safeguards and best industry practices during early sectordevelopment.

Date Approved: 20 July 2016.

THA: Distributed Commercial Solar Power REG: Distributed Energy Storage Solutions

ent.

2016 Case Studies

2

$ = US dollars $ = US dollars

Client: Fluidic.ADB Assistance: $5m equity investment.Key features:• Fluidic was founded in 2006. Its headquarter is in Scottsdale, United States

and has since deployed over 60,000 batteries across 1,200 remote sites inSoutheast Asia and Latin America.

• Fluidic is a privately owned, vertically integrated provider of distributedenergy storage solutions that use proven rechargeable zinc‐air batterytechnology with integrated smart‐grid intelligence.

• The project will provide institutional capital to secure Fluidic’s executioncapability as it makes critical inroads to the Asian telecom, micro‐grid, andrural electrification markets.

• The project will promote the application of long‐duration battery technologyfor distributed energy storage solutions, supporting (i) greater adoption ofclean energy by more off‐grid and weak‐grid service providers (like telecomoperators), and (ii) wider implementation of modern, clean ruralelectrification projects.

• Cofinanced by Asia Climate Partners.ADB’s Value Addition:• Play a key role as a knowledge partner to dispel uncertainties regarding new

energy storage technologies and promote discourse among key stakeholdersto expand the application field for battery solutions.

Date Approved: 13 September 2016.

Client: Stumpf Energy.ADB Assistance: $47m loan in baht.Key Features:• ADB’s first investment in grid‐parity solar in Thailand.• Rollout and operation of multiple solar PV installations on rooftops of

commercial and/or industrial buildings owned or leased by host companiesin Thailand up to an aggregate capacity of 100MW.

• The project will demonstrate the viability of the business model of solarprojects on rooftops of commercial and industrial buildings that do notrequire feed‐in‐tariff subsidies in Thailand. This will lead to unlocking of vastpotential to scale up distributed solar photovoltaic installations, particularlyin Thailand’s growing manufacturing sector.

• The project will contribute to the diversification of energy mix by addingrenewable energy capacity, strengthen energy security, and reduce relianceon fossil fuel in Thailand.

ADB’s Value Addition:• Enhances local commercial banks’ confidence to co‐invest.• Fills a funding gap in long‐term finance that will ensure that commercial

rooftop solar projects are financed in a sound and sustainable manner.Date Approved: 10 August 2016.

MYA: Telecommunication Towers InfrastructurePAK: Triconboston Wind Power

$ = US dollars

2016 Case Studies

3

$ = US dollars

Client: Triconboston Consulting Corporation (Private) Limited, owned by SapphireGroup and Bank Alfalah Limited.ADB Assistance: $75m loan.Key features:• The Sapphire Group founded in 1940 is a network of family owned and

managed companies and is one of Pakistan’s largest conglomerates, withinvestments in textiles, power, dairy, and real estate development.

• The project comprises the design, construction, and operation andmaintenance of three 50 MW wind power plants (and associatedinfrastructure) adjacent to each other in Jhimpir. Each plant will have 1.7 MWGeneral Electric turbines, each with a 103‐meter rotor diameter and an 80meter hub height.

• The project will supply power at the revised feed‐in tariff of $0.1045/kWh,which is signficantly lower than the previous FiT.

• The project will provide ensured access to affordable, reliable, sustainable,and modern energy and improved power generation mix through investmentby the private sector.

• Cofinanced by DEG, IFC, Islamic Development Bank.ADB’s Value Addition:• Foster confidence among investors and government entities that efficiencies

in renewable energy can be realized and that wind power can successfullyachieve grid parity.

• Provide long term limited recourse dollar financing not available in Pakistan.• Reassure sponsors that government entities will continue to provide support

throughout project life.Date Approved: 27 October 2016.

Client: Irrawaddy Green Towers.ADB Assistance: $50m loan.Key features:• The project consists of rollout of up to 5,000 towers nationwide that are

essential in enabling telecommunication operators to provide a full range ofmobile and data services in Myanmar.

• Irrawaddy Green Towers (IGT) is the largest tower company in Myanmarwith over 2,000 towers commissioned by the end of the first quarter of2016.

• The project will provide wider coverage and improve connectivitynationwide to help boost Myanmar’s competitiveness and broaden access toopportunities and services.

ADB’s Value Addition:• Support the government’s reforms and the country’s overall transformation

into a more liberalized economy by providing financial assistance to thecountry’s leading tower company to roll out essential infrastructure.

• Catalyze private sector investment into the telecommunication sector inMyanmar.

Date Approved: 7 November 2016.

INO: Tangguh Liquefied Natural Gas ExpansionPRC: Integrated Wastewater Management

$ = US dollars

Client: China Water Environment Group.ADB Assistance: $150m loan and $100m B‐loan in dollars and yuan.Key features:• The project will support CWE in designing, constructing, and operating series of

facilities spanning several components, including (i) wastewater treatmentplants; (ii) sludge treatment plants; (iii) sewage conveyance and interceptionpipelines; (iv) other civil works, such as the dredging of rivers and lakes,riverbanks reinforcements, odor treatment, and landscaping; and (v) thedevelopment of wetlands.

• The impact will be mitigated water pollution in rivers and lakes in the PRC,consistent with the goals of PRC’s State Council.

ADB’s Value Addition:• Significant demonstration effect as the first ADB private sector intervention to

support an emerging PPP model for integrated wastewater management.• ADB’s requirements will ensure that CWE implements high quality

environmental and social management, commercial best practice, and strongcorporate governance.

• ADB will mobilize commercial cofinance by linking river and lake rehabilitationin the PRC, a new area for private participation, with the bank financingcommunity.

Date Approved: 18 November 2016.

2016 Case Studies

4

$ = US dollars

Client: BP, CNOOC and others.ADB Assistance: $400m loan.Key features:• The project will add the third 3.8 million metric tons per annum LNG train as

well as the associated offshore and onshore facilities and other supportinginfrastructure.

• The project will provide much‐needed natural gas to help meet rapidlygrowing domestic demand, particularly in the power sector.

• It will support development of a more sustainable fuel mix to reduce carbonemissions by using natural gas to displace coal or diesel in powering electricitygeneration.

• The project will accelerate economic development in the province of WestPapua, providing additional local employment opportunities and scope forhuman resource development in one of the country’s poorest regions.

• Cofinanced with JBIC.ADB’s Value Addition:• Mitigate the risks for all the stakeholders of substandard implementation of

environmental and social safeguards.Date Approved: 1 December 2016.

IND: ReNew Clean EnergyTHA: Grid‐Parity Rooftop Solar

$ = US dollars

Client:Weng Group and Sunseap Group.ADB Assistance:: $44m project loan in dollars or baht.Key features:• ADB’s second investment in grid‐parity solar in Thailand.• Rollout and operation of multiple solar PV installations on rooftops of

commercial and/or industrial buildings owned or leased by host companies inThailand up to an aggregate capacity of 100MW.

• The project will demonstrate the viability of the business model of solarprojects on rooftops of commercial and industrial buildings that do not requirefeed‐in‐tariff subsidies in Thailand. This will lead to unlocking of vast potentialto scale up distributed solar photovoltaic installations, particularly inThailand’s growing manufacturing sector.

• The project will contribute to the diversification of energy mix by addingrenewable energy capacity, strengthen energy security, and reduce reliance onfossil fuel in Thailand.

ADB’s Value Addition:• Enhances local commercial banks’ confidence to co‐invest.• Fills a funding gap in long‐term finance that will ensure that commercial

rooftop solar projects are financed in a sound and sustainable manner.Date Approved: 2 December 2016.

Client: ReNew Power Ventures Private Limited.ADB Assistance: $195m loan in dollars or Indian rupees.Cofinancing: $194.5m (Leading Asia’s Private Sector Infrastructure Fund).Key features:• ReNew was established in 2011 and has commissioned 1,167 MW of

operational capacity as of 31 August 2016. It has over 1.5 gigawatts of itsrenewable pipeline under construction.

• The project involves the construction of 398 megawatts (MW) of solar powerand 311MW of wind power subprojects across six states in India.

• When complete, the project will generate 1,400 giga‐watt hours of cleanenergy and help reduce 1.2 million tons of carbon di oxide emissions.

• The project will lead to continued diversification of India’s energy mix via theaddition of renewable energy capacity, providing the country with a secure,reliable, and sustainable source of electricity that strengthens energy securityand reduces its reliance on fossil fuels.

• Portfolio approach is a way to achieve greater leverage of ADB’s funding(simultaneous financial close of several projects) and hence greaterdevelopment impact.

ADB’s Value Addition:• ADB adds value by mobilizing a substantial financing package (up to 50% of

project cost from ADB and LEAP) to a private sector developer to undertake aportfolio of projects simultaneously.

• ADB assistance contributes towards meeting the government of India’s targetof renewable energy capacity addition.

Date Approved: 2 December 2016.

2016 Case Studies

5

$ = US dollars

CAM: Cambodia Solar Power INO: Muara Laboh Geothermal Power

$ = US dollars

Client: Engie, Sumitomo Corporation, and PT. Supreme Energy.ADB Assistance: $70m loan.Cofinancing: $20m parallel loan funded through the Leading Asia’s PrivateSector Infrastructure Fund (LEAP); and a $19.25m by the Clean TechnologyFund (CTF).Key features:• The project will develop, operate, and maintain geothermal steam

resources and a 80MW power generation unit in the Liki Pinangawan MuaraLaboh concession area.

• The development of baseload geothermal power plant and avoidance ofcarbon emissions will assist the government’s efforts to achieve sustainablegrowth targets through private sector investment.

• Cofinanced by JBIC and NEXI.ADB’s Value Addition:• The concessional finance from CTF motivates developers to complete more

challenging exploration programs and reach financial close.• Demonstrate the bankability of the new geothermal PPA and the

replicability of structuring solutions to manage complexities and resourcerisks presented by geothermal IPPs.


Client: Sunseap Group and SchneiTec.ADB Assistance: $3.6m loan; $3m B‐loan.Cofinancing: £3.25m loan by the Canadian Climate Fund for the Private Sector inAsia (CFPS) under the Clean Energy Financing Partnership Facility.Key features:• The project is the first utility‐scale solar power plant in Cambodia, and the

first competitively tendered renewable energy IPP project in the country.• The project will increase the electricity supply to meet the demand, address

the problem of imbalance of electricity supply between the dry and wetseasons, and improve the reliability and stability of Cambodia’s power supply.

• The tariff is highly competitive at below average supply cost without FIT orany other government subsidy, evidencing solar’s grid parity.

ADB’s Value Addition:• ADB was engaged early in the bidding process and contributed to a successful

bid of the project in a transparent manner and at a competitive price.• ADB mobilizes an international commercial bank loan in a market where long‐

term financing remains a challenge due to the political risk and the nascentstate of the banking sector.

• ADB also mobilizes a concessional loan from the Canadian Climate Fund forthe Private Sector in Asia, which help the use of indigenous power at acompetitive price.


2016 Case Studies

6

$ = US dollars

AZE: Shah Deniz Gas Field Expansion

$ = US dollars

2016 Case Studies

7

Client: Southern Gas Corridor CJSC.ADB Assistance: $500m direct nonsovereign loan; $500m partial credit guaranteewith a sovereign guarantee.Key features:• Stage 2 development of the Shah Deniz gas field, one of the world’s largest

gas fields commenced gas production in 2006.• the overall Azerbaijan natural gas sector will expand by encouraging foreign

operators to develop similar gas reserves, bringing in much‐needed technicalknowledge, development experience, and foreign capital.

• the increase in gas production and opening of the European market toAzerbaijan gas exports will improve regional integration and diversifyAzerbaijani exports of natural gas.

• the successful experience of foreign commercial banks financing a large projectin Azerbaijan will help increase foreign direct investment for the developmentof other upstream gas field development projects as well as midstream anddownstream petrochemical projects, which use natural gas as feedstock.

ADB’s Value Addition:• Facilitates the raising of large‐scale, long‐term commercial financing from

international banks.• Improve corporate governance and transparency in the oil and gas sector in

the country.• Help the government to continue the development of one of its largest

revenue‐generating assets in challenging times globally for oil and gasinvestments.


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