DFCC forging partnerships abroad
The DFCC Bank is concentrating on getting into more focused areas to collaborate with markets abroad, officials said. DFCC will explore a range of opportunities in consolidation and offshore markets and the bank will also leverage on its group relationships particularly in the area of Public Privat e Partnerships," Lakshman Silva, CEO/ Director DFCC told the Business Times.
He said DFCC has done some investments in Bangladesh through its associate firm, Lanka Ventures PLC. "We are also in close partnership with SAARC Development Fund and are lending through this to corporates,” he said.
He added that DFCC will step up its initiative to develop a sizable offshore lending portfolio focusing on emerging markets in South Asia and East Africa. The bank granted a US Dollar term loan facility to part finance the construction cost of a 7.6 Mega Watt (MW) mini- hydro power project in Uganda with a majority holding by Sri Lankan investors. The bank is also in the advanced stages of negotiations on two term loan facilities for hotel companies in Maldives, Mr. Silva added noting that DFCC will continue to actively pursue further offshore lending opportunities in these regions.
Last year the bank continued to explore new avenues in financing renewable energy projects. In 2017, the bank granted term loans to establish two waste-to-energy projects which will generate electricity using municipal solid waste collected within the Western Province. With each project generating 10MW, a total of 1,100 metric tonnes of municipal solid waste will be consumed per day, waste which would otherwise be dumped into landfills resulting in the creation of garbage mountains which led to events such as the Meethotamulla tragedy which resulted in the loss of human lives in April 2017. The second 10 MW ground based solar power project at Hambantota financed by the bank was commissioned during the year. Both these projects have posted impressive operating results.
Recognising that the Ceylon Electricity Board offers competitive tariffs for small scale solar photovoltaic installations under the Net Plus and Net Accounting methods, providing a lucrative opportunity for owners of large rooftops to reduce their electricity costs and generate economic returns, DFCC financed rooftop solar projects of 10 MW distributed across several factory buildings during the year, and anticipates providing financial support for many more projects, Mr. Silva said.
He said that state-of-the-art "Payments and Cash Management" (PCM) solution launched by the bank will in see more focus on the promotion of this solution to corporate clientele, which will improve the bank's CASA position and fee-based income opportunities.
DFCC Bank implemented the EIB SME and Green Energy Global Loan credit line in March 2014 and 70 per cent of the credit lines were allocated for SME projects and the balance 30 per cent for renewable energy and energy efficiency projects, Mr. Silva added.
The entire loan of EUR 90 million was allocated within the stipulated period. This amounted to approximately Rs. 14,478 million for 171 projects (net of cancellations) from three participating intermediary banks, including DFCC Bank. During 2017, supplementary allocations were granted to existing beneficiaries to finance cost overruns and expansions of approved projects with a view of utilising additional funds made available due to prepayments and gains from foreign exchange fluctuations. SME projects in a variety of sectors including auto services and repair, bakery products, construction, education, healthcare, manufacturing including agro- processing, printing, retailing, tourism, and trading have been funded by this credit line.
A total of 18 renewable energy-based power generation projects with 56.7 MW of total planned capacity via solar, wind, bio-mass, and mini-hydro technologies were financed by the credit line. By year end, a total of 16 projects with a capacity of 53.7 MW were operational.
When asked, Mr. Silva said that DFCC hasn't ruled out expanding into other countries and setting up shop, but it'll be a longer term plan.