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Sunref II
In collaboration with the Bank of Palestine and the Cairo-Amman Bank, Proparco and the European Union are launching the second phase of green finance program Sunref Palestine. This initiative aims at helping local banks catalyze a new market by increasing loans to green energy projects. Proparco’s investment officer in Palestine, Nura Treish, shines a light on the program.

Sunref II Palestine is the first-ever partnership between Proparco and the European Union on climate finance. What does Sunref II Palestine consist of?

Nura Treish
Nura Treish

Nura Treish (Proparco’s investment officer in Palestine): When you are dealing with a theme such as climate change in a place like Palestine – which presents its own set of political, economic and energy supply challenges – climate finance needs to be promoted by combining EU funding with Proparco financing to stimulate investment. Sunref II Palestine is composed of Proparco loans coupled with EU grants to provide investment incentives to Palestinian SMEs and technical assistance (TA) to project stakeholders.

What do you expect the concrete impact of Sunref II Palestine to be?

Sunref II Palestine follows on from the successful phase of Sunref I in the country headed up by AFD. The first phase demonstrated that there is both a market and real enthusiasm for green energy in Palestine. Consequently, Sunref II Palestine will target energy efficiency projects that are likely to have a real impact on reducing greenhouse gas emissions and on helping Palestinian SMEs to become more efficient and to thrive in a highly challenging economic environment.
In terms of measurable impacts, we estimate that the project will add 55 GWh of renewable energy and 40 Gwh of energy efficiency and benefit over 350 users, most of whom will be Palestinian SMEs.

What are the next steps for Sunref II Palestine?

We are currently in the final phase of preparing the commercial launch of the project and hope that banks can begin lending during the second quarter of 2022. The next phase is twofold: the first is concerned with marketing the project and ensuring that both investors and SMEs are aware of its benefits. The second involves finalizing technical assistance arrangements and grant amounts (in liaison with the EU and the TA provider), which will help banks to begin building a strong pipeline of projects focused on energy efficiency.

How does Proparco contribute to the effectiveness of Sunref II Palestine?

Over the years, Proparco has forged a strategic relationship with Palestinian financial institutions by building the trust and determination that have made it possible to almost double the amount of the credit facilities when compared to Sunref I (i.e., USD 55 million versus USD 35 million) and to double the number of banks . Proparco’s understanding of the Palestinian financial and infrastructure sectors has made it possible to deploy a targeted project that addresses the real problems and obstacles to investment.

What are the “make or break” elements of a climate finance initiative? How does Proparco’s expertise address these necessities?

I believe that we cannot create effective solutions without understanding the real challenges. Although Sunref has been launched by the AFD group in other geographies, our ability to tailor the project to the needs of the Palestinian market and understand the related challenges was crucial to the success of phase 1 and will remain crucial for subsequent phases. I also think that we need to be able to continuously improve and use the feedback from different stakeholders (partner banks, borrowers, etc.). The lessons learned from Sunref I have provided critical inputs for designing Sunref II Palestine. Another crucial aspect is building collaborative frameworks and partnerships that will maximize the target impacts. The partnership with the EU is a perfect example. When resources are limited, it is important to use them as effectively as possible to have a real impact.