Vietnam: Proparco supports MSB for its renewable energy and energy efficiency projects
published on 03 January 2023
Proparco has just signed a USD 30 million senior credit facility to finance renewable energy and energy efficiency projects promoted by Vietnam Maritime Commercial Joint Stock Bank (MSB). This financial support, the first of its kind between the two partners, will be accompanied by additional technical assistance on environmental and social (E&S) risk management in order to bring the bank in line with the best international standards.
Proparco is providing a USD 30 million senior loan to finance the growth of Vietnam Maritime Commercial Joint Stock Bank’s (MSB) climate portfolio. Founded in 1991 and based in Hanoi, MSB is the 13th private bank in Vietnam, based on total assets. Since 2020, MSB has been developing a portfolio of climate loans to SMEs and large companies to enable them in financing their renewable energy and energy efficiency projects.
The country’s environmental challenges, compounded by its high vulnerability to the impacts of climate disruption, are likely to hamper its growth. The Vietnamese government has therefore realized the urgent need to make a rapid transition to more sustainable industrial development.
Since 2020, Vietnam has initiated a shift towards more ambitious environmental policies and convergence with international standards in this area. In its wake, MSB has set itself the goal of becoming a national reference for green projects.
An environmental and social policy in action
MSB has financed 40 green projects to SMEs for a combined value of USD 17 million. MSB has also financed 3 large wind and solar projects for a combined value of USD 166 million and nearly 300 MW. MSB is looking to increase its commitments for the renewable energy sector.
With this senior loan, Proparco is supporting MSB in its efforts to finance green projects in Vietnam since 2020. But Proparco’s commitment to MSB does not stop there.
Since 2021, the bank has initiated the implementation of an environmental and social policy and sought technical support from international organizations for the implementation of a comprehensive ESMS in order to align itself with the best international standards. Proparco will therefore provide level 1 (high) technical support financed by the new technical assistance facility dedicated to financial institutions, available since September 2022. To this end, Proparco will engage the services of a consulting firm (system set-up, training, monitoring, etc.) under a tripartite agreement including MSB. The mission could last up to 24 months.
The first partnership between MSB and Proparco is part of this global context and is naturally aligned with the 100% Paris Agreements of the AFD Group’s strategy. The project will also contribute to SDGs 7 (Clean and Affordable Energy), 8 (Decent Work and Economic Growth) and 13 (Action on Climate Change).
Greening the energy mix
“We are pleased to partner with MSB in support of clean energy in the country. Through this new commitment in Vietnam, Proparco continues to support the development of renewable energy and energy efficiency projects, while accompanying the evolution of MSB’s E&S standards through the mobilization of dedicated Technical Assistance” said Paulina González Pardo, Deputy Head of Financial Institutions and Inclusion, Latin America and Asia at Proparco.
“The Vietnamese government has made strong commitments, especially announcing at COP26 its desire to move away from coal by 2040 and to achieve carbon neutrality by 2050. The country’s renewable energy production capacity should increase from 17.2 GW in 2020 to 36.6 GW in 2030 and 88.2 GW in 2040. We are proud to accompany MSB in its efforts to support the greening of the country’s energy mix” added Frédéric Billot, Financial Institutions and Inclusion Project Team Leader, Latin America and Asia at Proparco.
