1. 1 ASIA BIOMASS WORKSHOP 2007 BANK PEMBANGUNAN MALAYSIA BERHAD FINANCING FOR BIOMASS AND RENEWABLE ENERGY ROJECTS

2. 2 Agenda 1)Brief Current Scenario RE in Malaysia Sources of Financing Issues in project financing 2)BPMB - New Role 3)Financing Schemes For RE 4)Concluding Remarks

3. 3 Why RE? Pressure to shift to alternative sources of energy Reasons: Depleting and finite nature of fossil fuels 1.Dramatic rise in global energy demand brought about by: population growth increase in standards of living big energy appetite of emerging economies 2.Concern on environment – Kyoto Protocol

4. 4 RE in Malaysia Renewable Energy as Fifth Fuel incorporated in the 8 th Malaysia Plan (2000-2005) – SREP Program Only 2 projects came on stream and connected to the grid. – why? Uncertainty of availability and price of biomass waste Excess power generation capacity Tariff considered low Purely commercial venture Technology risks Accessibility of financing

5. 5 RE in Malaysia Strategies for alternative energy sources continued in the 9th Malaysia Plan (2006-2010) Electricity price reviewed Rise in oil price – reduce dependency Other sources such as Solar and MSW to be developed CDM support Financing issues

6. 6 Sources of Financing Debt Financing Commercial banks Developmental Financial Institutions (DFI) Export Credit Agencies (ECA) Equity Financing Developer’s own resources Capital market (IPO) Investors Technology supplier

7. 7 Issues in RE Project Financing Feedstock Generation Offtake Availability Pricing Transport costs Fixed price Long Term Supply Agreement Capacity of supply Reputable contractor and Technology provider providing guarantees Fixed O & M Contract Strong utility EPC Contract Proven and Suitable Technology Delivery schedule Realistic costing Competent technical team Creditworthiness Price Quantity Price escalation Duration Transmission costs What to consider for successful financing:

8. 8 BPMB – New Role To provide medium to long term financing focusing on the:- infrastructure maritime high technology ( including renewable energy from biomass, biodiesel and environmental related projects)

9. 9 RENEWABLE ENERGY

10. 10 Financing Schemes Fund Allocation ; RM1.0 billion RE/EE Fund and RM1.0 billion Biodiesel Scheme

11. 11 General Eligibility Criteria Incorporated in Malaysia Malaysian owned and controlled (at least 51% Malaysian shareholding) All existing and new enterprises carrying out or planning to carry out RE&EE projects are eligible Projects located in Malaysia

12. 12 Non-Eligibility Refinancing Financing of Shares Taking over existing productive capacity

13. 13 Mode of Islamic Financing FinancingPurpose Bai Bithaman Ajil Purchase of land, building,plant, machinery, equipment IstisnaConstruction of plant, building IjarahLease of machinery,equipment MurabahahPurchase of raw materials/working capital Al DaynFinance purchase of invoice Bai InahOperational exp. Capex Kafalah G’teeBank Guarantee

14. 14 RE/EE FUND Amount : RM1.0 billion allocation Target Market : Biomass (included oil palm biomass), forest residues, solar thermal, mini hydro, solar PV, municipal waste, rice husk and landfill gas Tenure : max 10 yrs (include max 2 of grace period) Profit Charged: Based on Cost of fund + Max financing amount : RM100m or 85% of project cost whichever is lower

15. 15 SECURITY Security is inclusive but not limited to the following:- Charge on project assets Assignment of Offtake Agreements or REPPA/FSA, Insurance Policies, Guarantees and all other project agreements Personal/Corporate Guarantees

16. 16 BIODIESEL SCHEME RM1.0 billion (capital market) Tarket market ; Manufacturing, processing, transportation and infrastructure development of the biofuel industry, which included biofuel plant, manufacturing equipment, transportation, storage and export distribution Max financing amount : RM100m or 85% of project cost whichever is lower Profit Charge: Cost of fund + Tenor : Max. 10 years inclusive 2 years grace period

17. 17 Concluding Remarks Renewable Energy shall remain as an important alternative source of energy for the future. But… Biomass for other applications? Other sources – mini-hydro, biogas, MSW, solar but need economic feasibility studies Tariff increased – is it attractive to developers? Other issues and barriers being addressed in 9MP - Implementation? Utility’s role Financiers appetite …..are we really up to it??

18. 18 Contact Us : Bank Pembangunan Malaysia Berhad Aras 26, Menara Bank Pembangunan Bandar Wawasan No.1016, Jalan Sultan Ismail 50724 Kuala Lumpur Telephone : +603-2611 3133 Fax : +603-2692 8250 Website : www.bpmb.com.my