PHARE Energy Saving Fund

Phare Energy Saving Fund was established by the European Commission and the Czech Ministry of Industry and Trade to enable financing for small and medium-sized energy efficiency projects. The EU Phare Programme for the Czech Republic (Energy Programme CZ 9303) provided EUR 4.5 million as a credit line. A local commercial bank (CSOB) was selected for the management of the fund in 1997. Supervisory functions of PHARE ESF are executed by the Ministry of Industry and Trade through the Monitoring Board. CSOB uses funds from the PHARE ESF to make loans for investments in energy savings projects in compliance with the appraisal, lending, administration, reporting and monitoring conditions set by the contract. PHARE ESF is a revolving fund i.e. part of its principal repayments is used for new loans. ESF enables to provide loans for eligible energy efficiency projects at a reduced interest rate. Each loan shall be composed of a blend of 33% Phare ESF resources and of the 67% banks own resources. Eligible projects for ESF loans generate savings by reducing energy consumption, but also by reducing the costs of energy (using cheaper fuel), by lower operating and maintenance costs, etc. To qualify for assistance through the ESF, at least 40% of the total savings achieved by the implementation of the project must originate from reduced energy consumption. All projects must demonstrate energy savings on the demand side. Conditions to obtain the loan: Own clients' resources from 20% to 40% of the investment costs. At least 60% of the project costs need to be covered by the ESF. Loan duration is from four up to ten years with a maximum grace period of one year. Possible maximum disbursement for a single project is CZK 50 million. Any company legally based in the Czech Republic, towns and municipalities and entities established by them, housing co-operatives, and other entities interested in financial loans that meet the standard rules of the Bank for being granted an investment credit for selected purposes including its security. Target sectors (set by Phare objectives) are: Industry; District heating; Public buildings (schools, hospitals, social Care, etc.); Residential buildings Programme Phare 2003 finished in November 2006. The 2003 Phare programme was taken as a preparation for implementing structural funds. CzechInvest helped applicants as an intermediary agency. The program was implemented on the basis of Financial memorandum between the Ministry of Finance of the Czech Republic and the European Commission DG Enlargement, which was signed on 15 October 2003 and financed 75% from pre-accession aid (Phare) and 25% from national budget. The objective of the programme was to support SMEs and consisted of two parts: 1. Grant scheme TECHNOLOGY In this grant scheme 90 SMEs were supported to buy modern technologies until the winding-down of the programme on 30 November 2006. In total 333 applications were received and assessed and 101 contracts signed. The difference between the number of signed and supported contracts was due to some beneficiaries deciding to quit the grant contract and finance the project entirely from their own sources. In spite of the fact that implementation of the Phare programme was delayed, the preparation of projects were for many enterprises, including those that were not selected, a worthwhile experience which could be used for applications for the Operational programme - Industry and enterprise co-financed from structural funds. 2. Service contract (consultancy services) In this part of the Phare programme a service contract was signed for EUR 2.7 million with GFA Terra Systems GmBH, a German consultancy firm. In the framework of the contract three blocks of activities were implemented: National Register of Consultants Czech Benchmarking Index Company competitiveness programme The National Register of Consultants was launched in September 2005. To date approximately 200 consultants are in the database.

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