Focus on renewable and energy efficiency

The Asian Development Bank approved a $300-million (9.94-billion-baht) loan to Thailand to help finance investment in energy conservation and environmental preservation programmes.

Chaiyuth Sudthitanakorn, the ADB executive director, said the funding would come under a climate investment fund set up to support green initiatives.

The World Bank, the ADB and other development banks are responsible for managing $6.24 billion in funds pledged by donor countries such as the US, Japan, Germany and Australia as part of a global initiative to help developing countries finance initiatives to combat climate change.

A Clean Technology Fund will support low-carbon energy programmes, as well as initiatives to improve energy efficiency, with funding provided through low-interest, long-term loans. A Strategic Climate Fund, meanwhile, will offer grants for programmes such as new forest plantations and renewable energy initiatives.

Thailand last November submitted a proposal to draw $300 million from the Clean Technology Fund to support the country's goal of increasing the share of alternative energy to 20% by 2022 and cutting greenhouse gas emissions in Bangkok by 15% from current levels.

Funds will be used to facilitate private-sector investment in renewable energy and energy efficiency programmes, support the development of the Bangkok Metropolitan Administration's Bus Rapid Transit system and ongoing alternative energy programmes led by the Electricity Generating Authority of Thailand and the Provincial Electricity Authority.

Other countries in the region also receiving allocations include the Philippines and Vietnam with $250 million each.

Mr Chaiyuth said the Finance Ministry would be responsible for working with private companies interested in using the loans to help finance various projects. Loans will be available at interest rates of 1% per year, with terms as long as 30 to 40 years. Funding could also be given in the form of outright grants.

Projects that may qualify for financing could include an initiative by the Government Housing Bank to build energy-efficient homes, research and development of fuel-efficient cars, or even government plans to expand Bangkok's subway system.

Mr Chaiyuth said that across the region, top borrowers from the ADB included China, Vietnam, Indonesia and India. China in particular has aggressively used ADB financing, including over $1 billion in loans to improve its southern rail network.

Thailand, in contrast, has been relatively frugal in borrowing from the ADB, with total loans taken of around $5 billion since the ADB's founding in 1969.

Mr Chaiyuth said the ADB also launched another green initiative where funds are lent together with commercial bank loans under a co-financing programme. The ADB has held talks with the Thai Bankers Association to solicit participation from local banks.