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People’s Republic of China: Guangdong Energy Efficiency and Environment Improvement Investment Program, Tranche 3 and Multitranche Financing Facility

sector: Energy | country: China, People’s Republic of

The project completion report (PCR) provided four lessons. First, it noted that strong government ownership was critical to the successful implementation of the project. It also noted the importance of management handbooks on procurement, financial management, and energy savings measurement and verification, which ensured the smooth and sustainable project implementation. Second, effectiveness of the financial intermediary loan modality was supported by independent evaluations of the financial viability of candidate sub-borrowers and the project‘s revolving funding mechanism. Third, actual energy savings achieved were higher than anticipated at appraisal. More accurate methods of estimating energy saving should have been used by establishing an accurate baseline, designing a customized measurement and verification method to verify energy savings from the outset, and using the same methodology for pre- and post-project energy-saving calculations. Fourth, third-party measurement and verification agencies ensured accurate assessment of energy savings and emission reduction for the subprojects.

The lessons learned in the PCR were a reprint of lessons found in the PCR for tranche 2 of the multitranche financing facility (MFF) investment program. Although this validation agrees with the lessons of the tranche 2 PCR, it seems inappropriate to simply copy lessons from one PCR to another without, at least, acknowledging that the lessons were the same as in the previous PCR and that the PCR for tranche 3 had no other lessons to provide.

In addition, this validation adds success factors of this MFF investment program. These include (i) an innovative MFF modality that allowed the establishment of the pilot efficiency power plant (EPP) model and the revolving use of loan proceeds for follow ups and replication across tranches; (ii) during implementation, the executing agency organized a series of seminars, workshops, and training on energy savings, financial management, and office capacity enhancement for sub-borrowers; (iii) buy-in from private sector companies as energy savings reduced their operating costs and increased their competitiveness; and (iv) engagement and development of private sector energy-service companies for replication and sustainability through different incentives, i.e., provision of credit, consultation, and training.

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