WHETHER DOING BUSINESS IN SANTIAGO OR Krakow, Budapest or Bang Kraui, American energy service companies agree: It's tough to find a lender to finance international projects.
ESCO executives working around the globe met to commiserate at the International Roundtable on Energy Efficiency Financing Feb. 26-27 at the Ritz-Carlton Hotel in Arlington, Va. Sponsors of the Roundtable included the National Association of Energy Service Companies and the Export-Import Bank of the United States.
Listening to foreign bank representatives, one might think few problems exist, that money is available. Yet from the ESCO perspective, money is there only for perfect customers, for large projects, or not at all. And besides winning a bank's confidence, ESCOs also must educate customers about performance contracting. They must find qualified customers, raft political turmoil and deal with devalued currencies, legal issues, organized crime and inflation.
Brazil, for instance, has essentially no long-term private bank financing, according to a study presented by Howard Geller of the American Council for an Energy Efficient Economy. Shorter-term financing is very expensive. Public development bank financing, available in theory, hasn't reached ESCO projects. Meanwhile, the market promises much: Paulo Cezar Tavares of PROCEL, the Brazilian electric energy conservation program, estimates that in the next five to 10 years, the ESCO business in his country will reap $5 billion, at least $500 million of that profit.
Perhaps the moral of the story worldwide (em drawn from speakers' comments (em is that banks and ESCOs need to allow for more risk in building foreign business, and that bases should be covered via ties to government or quasi-government funding agencies.
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