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EBRD to help boost energy conservation in Hungary
A US$ 5 million (ECU 3.8 million) loan from the European Bank for Reconstruction and Development (EBRD), signed today in London, will allow the Hungarian joint-stock company Prometheus Rt. to finance its ongoing energy saving activities and will support the development and growth of Energy Service Companies (ESCOs) in the energy conservation field.
At the signing, Jacques de Larosière, President of the EBRD, said: “The EBRD recognises the need for demand-side energy savings. This first loan contributes significantly to the transition process in Hungary: it helps to develop a new sector, to reduce energy consumption and to increase the efficiency and competitiveness of local public and private sector entities. The use of ESCOs is one of the most efficient ways for the EBRD to foster investment in small and medium-sized energy efficiency projects.”
The EBRD loan to Prometheus will enable the company to invest in energy-saving equipment. The company will use the loan proceeds for renovations, new parts and safety devices, and the operation and maintenance of energy installations in private sector businesses or public sector enterprises operating in Hungary.
ESCOs are industrial companies which, because of their extensive expertise and experience in energy conservation, are able to purchase, install and maintain for their clients (at their own initial expense) the equipment needed to generate significant energy savings, and to accept the risk of being reimbursed proportionally to the real savings obtained. ESCOs are paid through contractual arrangements that convert the customer's savings from reduced energy costs into revenue. ESCOs, which use a “Third Party Financing” concept, were previously unknown in the EBRD’s countries of operations.
This type of project enables private and public sector entities (such as prisons, hospitals, barracks and other public buildings) to realise energy conservation potential. The EBRD is the first international financial institution to lend for such an activity.
This project will strengthen Prometheus’s business and provide long-term cost savings for its clients through reduced energy consumption, and reduced operation and maintenance costs. Reduced energy consumption will also benefit the environment by lessening pollution due to fuel combustion. Macroeconomic benefits will arise from reduced energy imports.
Until 1992, Prometheus was a Hungarian state-owned company with a leading position in operating and maintenance services of heating systems, hot water, etc. In 1992, Compagnie Générale de Chauffe (CGC) acquired more than 75 per cent of Prometheus's stock and restructured the company, which has produced substantial results. CGC is the largest manager of energy systems in Europe and is active worldwide as the leading subsidiary of Compagnie Générale des Eaux in the fields of thermal energy activities and related environmental services.
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