Safety Net

June 06, 2009 (LBO) – Sri Lanka’s Commercial Bank of Ceylon (CBC) has inked a deal with the International Finance Corporation (IFC) to underwrite 50 percent of the investment risk in the volatile renewable energy business, a senior bank official said.

IFC is sharing the risk in renewable energy projects with us, said Amitha Gooneratne, managing director of CBC.

The credit risk is shared 50:50 with IFC.

Gooneratne said the CBC would be investing 30 million dollars on renewable energy generating plants.

“Most hydro renewable energy options are exhausted; now we have to look at riskier options such as wind power,” said Gamini Dharmasiri, deputy general manager, corporate banking of CBC.

“That is why the bank needs more cover,” said Dharmasiri.

IFC would receive a commission for sharing the downside risk, said Deva de Silva, head of South Asia enterprise development facility of the IFC.

In renewable energy projects adverse changes in climatic conditions are risk, said Naveen Sorriyarachchi, head of corporate finance at CBC.

CBC said it will be constructing a 10 mega watt (MW) and 20 MW plant in the north-western Puttalam district. However, officials were tight lipped on the actual amounts