The United Nations Industrial Development Organisation (UNIDO) in concert with the Ministry of Trade and Industry, as well as the Social Fund for Development, National Bank of Egypt, and the Commercial International Bank (CIB), agreed to allocate a financing portfolio of $35m to finance Egyptian factories’s conversion to operate on solar energy over the next year.
Daily News Egypt interviewed UNIDO Representative and Director Giovanna Ceglie to talk about the programme.
What is the nature of the programme? What is the total provision? And how much did each entity contribute?
UNIDO will contribute to the financing of part of the portfolio, which will be granted to factories that are willing to improve their energy efficiency through the use of solar energy systems.
According to the agreement, CIB will contribute $20m, the Social Fund for Development will give $11.5m, and the National Bank of Egypt (NBE) and the New and Renewable Energy Authority (NREA) are contributing $2m each. Moreover, a number of major companies in the field are contributing $1m, UNIDO is offering $200,000, and the Ministry of Industry is participating with $60,000.
What will the interest rate be for these loans?
NBE will fund local companies through soft loans with an interest rate ranging between 5% and 7%. The grace period and the repayment of the loans are both relatively long.
The agreement will come into force in parallel with the start of the Solar Energy in industrial Application project. The agreement offers soft conditions to factories such as low interest rates compared to usual rates, which makes it easier to do business.
When will the agreement officially activate?
UNIDO, NBE, and the Ministry of Industry are currently discussing the lending terms but the agreement will be activated in January.
The agreement is the completion of the Solar Energy in Industrial Applications project that was launched by UNIDO in March in cooperation with the Ministry of Industry and NBE with a total funding of $6.5m from the Global Environment Facility (GEF). This sum is allocated for UNIDO to spend on the support of companies willing to borrow from NBE.
What about the Solar Energy in industrial Application project?
The programme aims to stimulate companies to seek soft loans from NBE with interest rates ranging between 6.5% and 7% to finance solar energy applications projects. Companies seeking financing are stipulated to contrive 10% of the loan value.
UNIDO has been supporting and industrial energy efficiency initiative since 2015 and until 2017 with a total budget of $3.95m funded by GEF in cooperation with the Ministry of Industry, Egyptian Environmental Affairs Agency (EEAA), Industrial Development Authority (IDA), Industrial Modernisation Centre (IMC), Egyptian Organisation For Standardisation and Quality (EOS), and the Federation of Egyptian Industries (FEI).
UNIDO’s industrial energy efficiency initiative aims to review high-consuming energy means and seek other alternatives such as solar and wind power.
Which sectors does UNIDO prioritise?
The programme gives priority to the number of fuel-intensive industries such as cement, iron, fertilisers, chemicals, furniture, and food industries. UNIDO offers those sectors the technical support through the provision of experts in improving energy efficiency after examining the way these factories operate.
We are trying at first to explain the optimal way of consuming energy and then introduce them to renewable energy sources. Then we explain to these companies how to seek funding and how to request loans. UNIDO is dealing with a number of banks, such as NBE. The Bank of Alexandria also expressed its willingness to cooperate.
UNIDO was founded in 1966. We have been cooperating with governments, business associations, and the private sector to promote investment and technology, as well as competitiveness in the fields of renewable energy, agro-processing, energy management, and environmental resources.
The private sector has been concerned about obtaining funds from banks. Why do you think that happens?
Private companies face the same challenges everywhere in the world. Banks do not refuse to grant funds deliberately to private companies. After all, there are for-profit organisations. They refuse to grant funds to high-risk companies. This is what UNIDO is trying to avoid by teaching companies methods of obtaining loans.
UNIDO organises free training programmes to improve the worker efficiency, staff, and administrators. We want to plant the concept first and then harvest the results.
What is the support that UNIDO offers for the agro-industrial sector?
The agro-industrial sector is one of UNIDO’s most important sectors. We believe it is the largest sector to provide job opportunities through small and medium enterprises.
Egypt could dispense importing many food commodities if it adds an added value to agricultural commodities and increase foreign exchange reserves.
Through the Green Industry initiative, UNIDO supports small farm owners to produce agricultural commodities. We also offer workshops and training that enable them to achieve added value to produce additional products that can be exported or sold on the domestic market with the same international standards.
We train farmers to improve farming methods to increase productivity and reduce water consumption.
The Green Industry initiative started a year ago by training hundreds of farmers and small companies all over Egypt. The budget for this programme is $10m collected from Japan, the Netherlands, and Italy, along with UNIDO. The programme will continue until 2017.
What about UNIDO’s programme to develop Upper Egypt’s low socio-economic villages?
We are working on a number of development projects in Upper Egypt to develop low socio-economic villages there by supporting small enterprises.
The initiative supports small projects of fishermen, furniture workshops, diary, and products. We open new markets abroad for them through dedicated training programmes.
The Green Industry initiative began in Minya, Luxor, and Qena with a budget of $6m. We will launch it in Sohag next year with a budget of $1.5m.
What about the cooperation between UNIDO and the Ministry of Industry during the current period?
UNIDO completed the preparation of its vision for the industrial sector development. We have presented this to Minister of Industry Tarek Qabil. We have also been discussing the sector’s development with FEI. I cannot give information about the vision until the ministry officially announces it.