US$25m for clean energy projects
Published:Friday | November 1, 2019 | 12:32 AM
National Commercial Bank Jamaica, NCB, and the US Agency for International Development, USAID, have partnered on a US$25-million ($3.4-billion) loan facility to fund renewable energy projects.
The loan, facilitated by USAID, will be offered across the Caribbean.
“This agreement will assist those Caribbean small and medium enterprises, or SMEs, with collateral constraints to access financing for energy-saving project, clean energy production projects and other projects such as investments in machinery, equipment, facilities, business expansion and small-scale irrigation systems,” said Brian Boothe, senior general manager for corporate, commercial and consumer banking at NCB, Jamaica’s largest commercial bank, during the signing ceremony at the NCB Wellness Centre in Kingston on Thursday.
“It provides NCB with a US$25-million loan portfolio guarantee. It reduces NCB risk exposure and allows it to use its own resources to increase lending for energy investments not just for Jamaica, but for the Caribbean,” said John Barsa, USAID assistant administrator for Latin America and the Caribbean. “This is the first such loan guarantee that is regional in scope,” he said.
The facility will guarantee the lending to registered SMEs operating in Jamaica, Barbados, The Bahamas, Dominican Republic, Grenada, Guyana, St Kitts and Nevis; and Trinidad & Tobago. NCB explained that the qualifying countries were based on a list from USAID. Notable absences included Haiti, whose economy is in turmoil amid massive demonstrations aimed at ousting the current president; and Cuba, where efforts by the Obama administration to normalise relations have been rolled back by the Trump administration.
Loans under the NCB-USAID facility are capped at US$5 million; and guarantee amounts up to US$2.5 million. Interest on the loans are set at 7.0 per cent for Jamaican dollars loans and 5.0 per cent for US dollar loans. The repayment period ranges up to 15 years.
“Availability of financing is not the problem. Collateral is a big friction point,” said Benjamin Daley, managing director of Reil Energy, which is a local contractor for a National Water Commission solar project currently under way.
John McIntyre, USAID deputy chief of mission to Jamaica, described the region as vulnerable to natural disasters and the high cost of energy; and that the loan facility would strengthen the region’s energy resiliency.
“It will increase access to finance,” he said.