client
MinMinas and FINDETER – represented by KfW
Implementation:
2015-2016 (phase 1) / 2017 (phase 2)
project description
This project consisted of two phases.
Phase 1: Fund Structuring Services for FENOGE: In 2014, the Government of Colombia enacted new legislation to promote renewable energy (RE) and energy efficiency (EE), as well as regulate the integration of non-conventional renewable energy sources (FNCEs) into the national energy system. The legislation provided the framework for the creation of a national fund (FENOGE) to specifically promote investments in FNCEs and EE measures. Econoler was hired to help develop financial products for FENOGE and then design and draft operations manual of the fund and Terms of References for Trustee, for the Fund Manager and other documents.
Phase 2: Development of a New RE/EE Financial Product for Financiera del Desarrollo Territorial S.A. (FINDETER): FINDETER is one of the national development banks in Colombia. It aims work with FENOGE in the future and to implement dedicated RE/EE lending products with financing from FENOGE. To enhance FINDETER’s experience in EE/RE lending ahead of the operationalization of FENOGE, KfW mandated Econoler to develop a new dedicated financial product, unrelated to FENOGE, using direct KfW financing.
highlights
Phase 1:
- Provided feedback on the scope of the draft Presidential Decree regulating FENOGE;
- Validated the findings of a previously conducted prefeasibility study of the Colombian market for RE/EE projects;
- Developed a fund concept for FENOGE;
- Refined and finalized the fund concept by reviewing the legal structure and institutional setup, governance and organizational structure, funding sources, as well as implementation and management arrangements;
- Developed the scope of services for setting up and managing the fund, including technical assistance services;
- Developed an Operations Manual outlining the fund concept and provided detailed guidelines to administer and operate FENOGE, namely:
- Objectives and principles of operations;
- Institutional setup, organizational structure and staffing;
- Policies, products and eligibility criteria to support projects and programs;
- Project and program investment cycles with detailed internal processes;
- Detailed guidelines for relationships with project developers, program operators and intermediaries, as well as for contracting counterparties and monitoring support programs;
- Key internal document templates.
- Drafted the terms of reference for selecting the trustee including a draft agreement between the Trustee and FENOGE.
The Ministry of Mines and Energy (Minminas) was capable of launching and operating FENOGE thanks to the documents delivered by Econoler. FENOGE structuring and staffing began at the beginning of 2018.
Phase 2:
- Conducted a market analysis on priority areas and the types of potential project investments:
- Reviewed and updated information on Colombia’s legal and institutional frameworks;
- Identified a potential pipeline of RE/EE projects, main market barriers and ways to overcome these;
- Reviewed the added value of FINDETER compared to other players;
- Developed market transformation strategies for developing RE/EE with clear understanding of the technical assistance required to open up and foster this market.
- Designed a dedicated RE/EE credit product, including a product market scope, target clients, financial structure, risk range and pricing. The product was designed with several modalities, reflecting the peculiarities of different market sectors and project types.
- Designed a TA package:
- Assessed FINDETER capacity and one of its partner banks to determine the type of support necessary;
- Recommended the necessary additional support to ensure successful implementation of the product;
- Developed guidelines on how to deliver TA services in identified critical areas.
Econoler provided FINDETER with the detailed product design and recommended TA structure to overcome capacity gaps at different levels within the organization and at FINDETER’s implementing partner banks. The product was launched in 2017.