The FINANCIAL — IFC, a member of the World Bank Group, Deutsche Bank and Bank AL Habib Limited Pakistan on June 29 announced a new trade financing deal to allow the import of equipment for a new wind power plant, boosting the country’s generation of clean energy and supporting cross-border trade.
IFC issued a guarantee to Deutsche Bank on behalf of Bank AL Habib, to back the letter of credit issued by Bank Al Habib for the deal. The guarantee will allow Yunus Energy to import a wind power turbine from Nordex Germany, helping to increase the supply of clean energy generated through wind farms.
Pakistan has been facing a severe power deficit in recent years with daily blackouts hindering industrial growth and adversely affecting the quality of life for millions, according to IFC.
Abbas D Habib, Chief Executive and Managing Director of Bank AL Habib, said: “We have a long standing partnership with IFC. The guarantee provided by IFC demonstrates a high degree of confidence in the bank, and the growing potential of Pakistan’s financial and renewable energy sectors.”
The deals comes under the umbrella of IFC’s $5 billion Global Trade Finance Program, which extends and complements the capacity of banks to deliver trade financing by providing risk mitigation in new or challenging markets. In fiscal year 2015, IFC issued guarantees of more than $1 billion to secure trade transactions by partner banks across the Middle East and North Africa region.
“This transaction further underlines our commitment to assisting local financial institutions support Pakistan’s infrastructure development. Deutsche Bank is committed to supporting the strategically important renewable energy industry in addition to leveraging our global reach, servicing and processing skills in trade finance to be the bank of choice for financial institutions in Pakistan for cross-border trade,” said Ahmer Hasan, Chief Country Officer for Deutsche Bank Pakistan.
The deal is also part of World Bank Group strategy to mitigate climate change and focus on renewable sources of energy.
Mouayed Makhlouf, IFC Regional Director for the Middle East and North Africa, said: “Supporting renewable energy and cross-border trade are strategic priorities for IFC in Pakistan and emerging markets, as they have a great impact on spurring economic growth and development.”
Pakistan represents IFC’s second-largest exposure in the MENA region, with over $5.6 billion in cumulative investments committed to date. IFC’s current investment exposure in Pakistan is about $1.1 billion in over 45 companies in sectors including infrastructure, financial markets, and general manufacturing and services.