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Power plant just part of bank's 'green credit'plan

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Time:2016-07-26  Source:THE DAILY TELEGRAPH

On April 21 the second phase of a power plant in Tema, Ghana, which was built by Chinese contractor Sunon Asgoli Power (Ghana) Co, became operational.

“The project is the fruit of ever-growing Ghana-China ties,” John Dramani Mahama, Ghana’s president, told the guests at the launch of the power plant’s second phase. “It can help us realise our goal to have a 5,000-megawatt power generation capacity, making Ghana an electricity hub in West Africa.”

Construction of the two phases of the power plant took almost eight years, and with installed capacity of 560,000 kilowatts, the natural gas-fired plant is expected to quench the thirst for electricity in West Africa.

One of the project’s main supporters is China Development Bank, which focuses on financing projects in infrastructure, basic industries, energy and transport.

It is also one of China’s largest overseas financiers.

For the construction of the two phases of the Ghana project, China Development Bank, or CDB, offered $580 million (£432 million) in loans. Its subsidiary, China-Africa Development Fund, also invested $90 million in the project, and the financing package met more than 80 per cent of the project's funding requirements.

Sunon Asgoli Power is a joint venture between Shenzhen Energy Group and China-Africa Development Fund.

A key factor that led to CDB’s decision to finance the project was its significance in terms of environmental protection, sustainable development and its role in driving local growth.

Using natural gas for fuel, the plant’s emissions will be substantially decreased compared with coal-fired facilities.

The Tema power plant is just one of several overseas projects that have benefited from the bank’s “green credit” principle.

While supporting Chinese companies as they are looking to go global, CDB has developed a strict environmental standard for its lending business.

The bank hopes that, along with its partners, it will be a responsible corporate citizen in both domestic and international markets.

Resource and energy conservation is an important criterion when the bank assesses whether or not to finance projects. It aims to finance projects with minimal environmental impact and social risk.

China Development Bank is one of the earliest advocates of green credit practice in China, which aims to support environmental protection and energy conservation through its designated loans and investments.

Since 2007 the bank has implemented new credit policies, guiding loans and investments into energy conservation, emissions reduction, water and air pollution control and other environmentally friendly projects and industries.

China Development Bank issued loans of up to 191.9 billion yuan (£21.4 billion) to environmentally friendly and energy-conservation projects at home and abroad last year.

By the end of last year, the volume of the bank’s outstanding loans to such projects totalled 1.57 trillion yuan (£175 billion).

The bank was China’s first financial institution to join the United Nations Global Compact.

The UN Global Compact is an initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

China Development Bank has also participated in the United Nations Development Programme’s plan for sustainable finance.

In February 2008 CDB established a special team to guide the implementation of the Equator Principles in its operations.

The Equator Principles are a risk management framework adopted by financial institutions for determining, assessing and managing environmental and social risk in projects.

As a representative of the banking sector, CDB also worked with Chinese financial regulators to draft the Guidance for Green Credit.

In the field of international business CDB has developed an environmental and social risk assessment system that adheres to UN Global Compact principles.

Under the system, environmental and safety risks are crucial indices in appraising potential borrowers. The credit ratings of clients are downgraded if they have or ever had any environmental and safety accidents.

A project's environmental impact assessment must be approved by the government of the country or region where the project is located before a financing agreement can be signed.

Environmental monitoring and protection and social risk controls are included in the clauses for standard overseas financing contracts.

Under the clauses, the risk controls will continue after a loan contract comes into effect, which requires the borrower to regularly report its measures and effects in risk controls. In case of serious accidents the bank has the right to cancel the loans.

Hu Huaibang, chairman of CDB, said the bank aims to create win-win co-operation with its overseas partners and stakeholders through its green credit system.

“We will continue to improve the green credit system, especially in the fields of water, air and soil pollution control, to make our planet a better place,” Hu said.(By ZHAO SHIJUN)