Procedure for Implementation and Issuance of RSF Guarantees

02/07/2024

On the morning of June 27, 2024, the training course "Procedure for Implementation and Issuance of RSF Guarantees", under VSUEE project was organized in Ho Chi Minh City.

On the morning of June 27, 2024, as part of the Vietnam Scaling Up Energy Efficiency Project (VSUEE), the Ministry of Industry and Trade, in collaboration with Saigon - Hanoi Commercial Joint Stock Bank (SHB), organized a training course on "Procedure for Implementation and Issuance of RSF Guarantees" for HCM City Development Joint Stock Bank (HD Bank). Representatives from the Ministry of Industry and Trade, the World Bank, SHB, and HD Bank's staff attended the event.

Vietnam is one of the countries with high energy intensity in Southeast Asia. Industrial growth is the main driver of the increasing energy consumption in Vietnam. According to statistics, the industrial sector accounts for more than 50% of the total national energy consumption. Therefore, efficient and effective energy use in the industrial sectors is a crucial solution to ensure national energy security.

At the beginning of the training, Mr. Chu Ba Thi - Senior Energy Expert from the World Bank, shared that energy conservation is a very important pillar to achieve Vietnam's goal of net-zero emissions by 2050 as committed at the 26th UN Climate Change Conference (COP26). According to the general assessment of the International Energy Agency (IEA), energy efficiency can reduce about 40% of total energy sector emissions.

Mr. Chu Ba Thi - Senior Energy Expert, World Bank, opening speech.

Mr. Hoang Viet Dung – Representative from the Department of Energy Efficiency and Sustainable Development (Ministry of Industry and Trade) noted that at COP26, Vietnam had strongly committed to achieving net-zero emissions by 2050. This commitment was reaffirmed at COP27 and most recently at COP28 in Dubai, UAE.

On March 13, 2019, the Prime Minister issued Decision No. 280/QĐ-TTg approving the National Program on Energy Efficiency and Conservation for the period 2019 – 2030 (VNEEP3). The goal of the program is to achieve an energy savings of 5.0 to 7.0% of the total national energy consumption from 2019 to 2025 and 8 to 10% from 2019 to 2030.

The Vietnam Industrial Sector Energy Efficiency Project (VSUEE) is funded by the Green Climate Fund (GCF) through the World Bank. The project is designed to promote energy efficiency and conservation in Vietnam's industrial sector, contributing to the energy savings targets of the VNEEP3 program and the commitment to achieve net-zero emissions by 2050.

Mr. Hoang Viet Dung - Representation of the Department of Energy Efficiency and Sustainable Development speech at the training course.

Throughout the training, SHB, the RSF managing unit, detailed the RSF’s operational procedures and guarantee approval processes. The $75 million RSF, replenished by the GCF through the World Bank, was established to mitigate credit risks for financial institutions funding energy-saving investment projects.

Representative of Risk Sharing Facility Board Management introduces the fund and how to implement.

Energy experts from Vietnam Technology Solutions Corporation (VETS) presented on efficient energy use in industry, including identifying costs, calculating energy savings and emission reductions, evaluating the feasibility of energy efficiency projects, and applying the learned concepts through case studies.

The training, attended by over 40 HD Bank credit promotion and assessment officers, enhanced understanding of the VSUEE project, RSF, operational manuals, and the RSF guarantee approval process, highlighting the potential energy savings of eligible investment projects.

Image of delegates at the training course.

The Risk Sharing Facility (RSF) is a component of the Vietnam Sustainable Energy Use Enhancement Project (VSUEE) and has a scale of $75 million, replenished through the Green Climate Fund via the World Bank. The fund is established to provide credit risk mitigation for financial institutions involved in lending for energy-saving investment projects through the issuance of RSF credit guarantees.

Objective:

The RSF aims to enhance the efficient use of energy across Vietnamese industries by: (a) Encouraging private sector investments in energy-saving projects; (b) Providing additional technical support and enhancing the capabilities of stakeholders in the energy-saving market.

Guarantee Mechanism:

Saigon - Hanoi Commercial Joint Stock Bank (SHB) has been selected by the World Bank and the Ministry of Industry and Trade as the Program Implementation Entity (PIE). SHB will manage and operate the RSF throughout the 15-year project duration, which includes two phases: the first 5 years of guarantee issuance and the subsequent 10 years of guarantee recovery. SHB will issue RSF guarantees for loans by Participating Financial Institutions (PFIs) intended for energy-saving investments (eligible sub-projects) by industrial enterprises or Energy Service Companies (ESCOs).

Duc Do

Procedure for Implementation and Issuance of RSF Guarantees

Consultation on the Draft of the Vietnam Energy Efficiency Fund Establishment

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