New DBJ energy line open to SMEs - Maximum J$15m per borrower
Published:Sunday | May 16, 2010 | 12:00 AM
Despite the poor take-up of its previous energy line of credit, the Development Bank of Jamaica (DBJ) is ready to roll out $500 million in loan funding under the DBJ/PetroCaribe Small and Medium Enterprises (SME) Energy Fund to be on-lent through its approved financial institutions or AFIs.
In 2009, only two of a total of 70 projects financed by the DBJ were for energy-related purposes, but the response to the new tranche is expected to be much higher.
The DBJ objective is to facilitate the development of all renewable and new or alternative-energy sources where feasible, as well as energy conservation and efficiency, the development bank said in response to Sunday Business queries.
The money has been set aside for SMEs across all sectors of the economy.
The DBJ notes that large enterprises can also obtain funding for energy projects from this and or other DBJ lines - for example, the SME Line of Credit or DBJ regular line of credit.
Up until mid-2009, DBJ credit windows at various AFIs in-cluded J$1 billion from the PetroCaribe-financed energy fund. There was very little response and the facility was placed on hold, the DBJ said, to create a register of energy auditors and because of the
absence of a public education programme promoting the advantages to be gained from overhauling energy infrastructure.
The organisation now seems ready to roll out funds to those with interest in creating more efficient energy usage in their operations as well as energy service providers.
A maximum of J$15 million can be obtained by an entity or group, representing 90 per cent of the project cost, including the cost of the compulsory energy audit. AFIs through which the money will be lent include, commercial banks, merchant banks, credit unions, the National People's Cooperative Bank, the National Export Import Bank of Jamaica Ltd and micro-finance institutions.
The repayment period will be up to seven years, including a maximum 12-month moratorium on the principal.
The current interest rate applicable is 12 per cent, fixed for the life of the loan.
Business enterprises that are eligible for funding include commercial and industrial users, energy service companies or ESCos, that is, providers of energy services to residential and commercial entities, and manufacturers of energy-efficiency equipment and devices.
Use of funds may include retrofitting to accommodate energy efficiency, energy conservation and alternative energy sources.
According to Claudette White, DBJ communications and marketing manager, the loans are given on a first-come-first-served basis and, when exhausted, the fund will be renewed from the DBJ's various lending agencies and resources.
White said all DBJ's lines of credit are available to finance energy projects and that just prior to the establishment of the energy fund, the DBJ had made several loans for renewable-energy projects.