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ICD Launches Central Asia Renewable Energy Fund

Sunday 7 October 2012

ASTANA (Arab News) – The launch of a $50 million Central Asia Renewable Energy Fund was announced in Astana, Kazakhstan, on Tuesday by Khaled Al-Aboodi (خالد العبودی), CEO of the Islamic Corporation for the Development of the Private Sector (ICD). The fund reaffirms the commitment of ICD to Caucasus and Central Asia Regions in key countries like Kazakhstan, Azerbaijan and Turkey.

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Khaled Al-Aboodi
The Islamic Corporation for the Development of the Private Sector (ICD) is a multilateral organization affiliated with the Islamic Development Bank (IDB) Group. Its authorized capital stands at $2.0 billion, of which $1.0 billion is available for subscription. The current subscribed and paid-in capital is $875 million and $568 million respectively. Its shareholders consist of the IDB, 51 member countries, and five public financial institutions
The mandate of ICD is to support the economic development of its member countries through provision of finance to private sector projects in accordance with the principles of the Shari’a law. ICD finances projects that are specifically geared to creating employment opportunities and boosting exports. Furthermore, ICD mobilizes additional resources for projects and encourages the development of Islamic financing and capital markets. It also attracts co-financiers for its projects and provides advice to governments and private sector groups on policies aimed at encouraging the establishment, expansion and modernization of private

Target countries encompass Kazakhstan, Turkey, Azerbaijan, Kyrgyzstan, Turkmenistan, Tajikistan, Uzbekistan, Bosnia, Albania and Kosovo.

Under ICD’s management and sponsorship, the fund is set to raise up to US $50 million from governmental and institutional investors. The fund has received strong interest from several target investors and already firm commitment of $25 million, corresponding the minimum initial close target.

The fund will invest in a portfolio of private equity transactions in projects that use tried and tested technology such as wind, solar, biomass, and small hydro projects. The investment horizon of the fund is 8 years and exit possibilities will be provided over time. ICD Asset Management division aims through this initiative at creating a momentum in the whole value chain of the renewable energy sector in the target region with at the same time offering the opportunity to investors to receive stable long-term cash flows and allowing generation of carbon credits.

With the objective to promote strategic investment flows and expertise into the renewable energy sector in those countries, the fund will capitalize on the region’s still under-exploited potential. The heterogeneity of the target regions from macro economic, geographic and natural resource perspectives will provide the fund with the opportunity to build a naturally diversified portfolio.

However, Kazakhstan has ruled out adopting alternative energy methods for now saying that it will continue to exploit its vast natural resources for economical reasons. Speaking to reporters after the VII KazEnergy Forum, the chief of KazEnergy Association Timur Kulibayev said that the country was aiming to meet 10% of its energy demand through alternative energy. “It’s very fashionable these days to talk about alternative energy,” Kulibayev said adding that "we would look for alternative energy once its cost of production becomes lower and feasible”.

A news release issued by KazEnergy said that Kazakhstan’s 80% of power generation is generated by coal. The nation is home to one of the largest coal reserves in the world. The second largest oil producer in the CIS after Russia is looking at immediate financial goals than long-term environment goals.

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