BNPP LATAM GLOBAL GATEWAY CLIMATE RISK SHARING

The funded delinked risk sharing operation refers to an existing portfolio of project finance loans in the renewable energy, transport and infrastructure sectors. Through the operation, the intermediary will be able to provide additional loans to finance eligible Global Gateway projects across Latin America with a focus on renewable energy (Solar photovoltaic, onshore wind and battery projects) as well as transmission lines.

The operation sets up an EIB-BNPP cooperation to provide new loans to support large-scale private sector projects in Latin America, aligned with the Global Gateway Investment Agenda. The aim is to contribute to improve availability of financial resources for renewable energy and transmission lines in the region. The operation is in line with the EIB priorities on sustainable energy, energy security and climate change, according to the Climate Bank Roadmap.

The operation concerns a funded de-linked Risk Sharing facility for an amount of up to USD 160m with BNPP that will finance 100% of Climate Action investments. The Bank will de-risk part of the exposure in respect of a portfolio of existing project finance loans originally financed by BNPP and with the resources made available by the Bank, BNPP will on-lend USD 160m to support at least USD 320m of eligible projects aligned with the Global Gateway Investment Agenda across Latin America in the renewable energy and electricity transmission sectors. By developing such strategic infrastructure, the operation contributes to the "Transition to renewable energies and energy efficiency" pillar of the Team Europe Initiative Green Transition - EUROCLIMA Latin American and the Caribbean ("LAC"). The project will also enhance EU-LAC cooperation on climate action under the Green Transition priority of the Multiannual Indicative Programme 2021-27 for the Americas and the Caribbean, aligning with key partner countries' Nationally Determined Contributions and long-term strategies for climate neutrality.

Projects under this operation will facilitate investments in renewable energy and transmission networks with an excellent economic rate of return and broader social benefit considering the costs of implementation and operation achieved and the economic value of the clean/renewable electricity generated at a cost below the cost of fossil-fuel based alternatives in Latin America. This operation is, therefore, aligned with EU priorities in the region (particularly the Global Gateway) while addressing existing energy market failures, such as negative environmental externalities and incomplete markets by reducing carbon emissions and air pollution (compared to avoided fossil fuel-based generation with a higher cost). BNPP holds extensive local presence and a recognised in-house project finance expertise to manage implementation and monitoring, with a proven track record of similar energy projects in the region.

Amidst an environment in Latin America where Project Finance transactions are escalating in magnitude, the Bank's participation provides capital relief, thereby stimulating the origination of new eligible loans to large high-impact projects. By requiring the New Projects to be aligned with the Global Gateway Investment Agenda in Latin America, the operation will move the Project Finance commercial bank sector closer to the EU priorities in the region.

The Bank will require BNPP to have in place the necessary procedures to ensure that Final Beneficiaries implement the sub-projects receiving Bank financing in compliance with national legislation and the relevant ElB's Environmental and Social Standards as well as international treaties and conventions signed and ratified by or otherwise applicable and binding in the country. The project will be appraised and monitored in line with the Bank's policies, including the Environmental and Social Sustainability Framework.

The Bank will require the promoter to ensure that implementation of the project will be done in accordance with the Bank's Guide to Procurement.