JESSICA Holding Fund in Lithuania for Sustainable Investment in City Areas Daiva Matonienė Alternative member of EU Co. R ECR political group member Member of Šiauliai City Council in Lithuania 25 -04 -2017, Brussels
John D. Rockefeller I would rather earn 1% off a 100 people's efforts than 100% of my own efforts
Strategic view EU funds over 2 periods
How to achieve the best result with limited resources? Lithuanian experience 2007 -2013 – first experience setting up Jessica for EE in residential housing, Jeremie for SMEs 2014 -2020 – strategic focus on the continuation of established FIs and expansion to other sectors
Facts about Lithuanian Housing • Population ~ 3, 00 million • More than 38, 000 apartment blocks • More than 800, 000 apartments • 66 % of population lives in multi family buildings built before 1993
JESSICA Fund in Lithuania 2007 -2013
How the JESSICA Mechanism Was Set Up? Negotiations and signing of Financing Agreement with EIB to manage Investment Fund EIB for 1 st call for Expressions of Interest ~9 months ~4 months EIB selects financial intermediaries
Main Features • Borrower: House-owner association • Fixed interest rate at 3% • Maturity up to 20 years • 2 years grace period (during construction) • No collateral • 15% written-off if 20 % savings attained and energy efficiency Class D achieved (upon completion) • Extra 25% written-off if savings reach 40% (limited duration – until end of 2014) • 100% of costs to prepare renovation documentation reimbursed (paid from national funds) • 100% of reimbursement of installments to low income families
No collateral, however: • Statutory protection mechanism which may have an effect of quasi-security: – The loans are included into the register of legal persons; – In case of sale of the apartment, under the law, the proceeds must firstly be used to cover outstanding amounts of the loan. This is ensured through notarization of the sale agreement; – The payments under the modernization loans for the highest-risk final beneficiaries (socially disadvantaged persons) are 100% covered by the State.
How it works from beneficiaries side? ~18 months
Big Disappointment: The Program didn’t fly… Chronic distrust of population in Government Failed public relations program Apartment owners poorly organized Large share of owners on fixed income Many low income people were eligible for heating bill compensations, and had no incentive to join the program
The Challenges A number of challenges were encountered Possible state aid issues – need to identify and register Legality of personal data handling Turning the apartment owners into borrowers (possibly) against their will, and as a consequence: Questioning the constitutionality of entire scheme Constraint: limitations within construction sector, as mostly small companies bid for contracts Success in battling „Gazprom“ on gas prices backfires
What next in 2014 -2020?
Design and set-up
JESSICA 2014 -2020 STRUCTURE
JESSICA Holding Fund in Lithuania for Sustainable Investment in City Areas Environmental Social cohesion Economic
Investments for Sustainability in City Areas structured to attract additional funds from private sources (banks, financial institutions, etc. ) to create leverage in energy efficiency sector
IT IS VERY GOOD IDEAS, BUT IS IT POSSIBLE TO DO? „Whether you think that you can, or you think you will not be able to do, both options are correct“ Henry Ford
Thank you for your attention! d. matoniene@gmail. com
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