The new investors in townby Adam Lane on Oct 15, 2012
The EBRD is preparing some impressive investments in the region’s energy sector. Nandita Parshad, EBRD Director of Power and Energy, explains its strategy
In September, the European Bank of Reconstruction and Development (EBRD) announced that it was considering a US $100 million investment in a Jordan power scheme (see Update, page 6).
Impressive as this sizeable investment would be, it is only the first part of much larger potential financing that the EBRD is looking at in the region.
“Energy will be an extremely important target for EBRD investments across the new region, where countries face energy, climate change and environmental challenges. Some of the challenges are common to the region, but there are individual requirements in each of the countries.
“Jordan, for example, is a country with limited and depleting natural resources and a growing population, which relies on imports to meet household and industrial energy requirements. It is amongst the most water-stressed countries in the world – a situation which is expected to worsen as a result of climate change.
The energy intensity of the Jordanian is the highest amongst the four countries where the EBRD is planning to invest (Morocco, Tunisia and Egypt are the others),” says EBRD Director of Power and Energy, Nandita Parshad.
In Morocco, Parshad highlights the fact that country is highly dependent on imported energy – with the country 93% dependent on external energy.
“In order to help the country respond to this challenge, the EBRD will work on the more efficient use of energy resources and support the implementation of the country’s renewable strategy to reduce dependency on imported energy.
The EBRD will help improve energy efficiency through municipal and public services, in public or private buildings, the transport sector and across numerous industries as well as improving fuel processing. It will encourage cleaner and alternative fuel uses and contribute to the reform of the energy sector.”
Parshad says that the EBRD invests in projects according to three key principles. As a largely self-financing entity, the investment must make commercial sense. It must also demonstrate that it will have a positive effect on the economy – by, for example, raising the quality of environmental or social standards.
The EBRD must also be “additional”, investing in an area where the private sector is unwilling or unable to invest its own funds.
“As far as energy efficiency is concerned, it is a key element in our investment strategy. This is because it has a duel impact: by being more energy efficient, companies and economies generally have a positive impact in the context of climate change.
But most immediately for these economies, energy efficiency makes business sense. By being more energy efficient, energy costs go down and companies become more competitive. It is an integral part of the process of economic transition,” Parshad says.
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