U.S.-Mexico Bank Seeks Clean and Efficient Energy Projects.

SAN ANTONIO -- With expansion into new environmental sectors beyond its traditional areas, the North American Development Bank (NADB) is actively pursuing projects that seek to improve air quality in the U.S.-Mexico border region. Efforts to date have concentrated on street paving projects that reduce particulate matter in several binational airsheds. However, an additional sector that offers promise for NADB is clean and efficient energy.

Improving air quality and generating strong investment potential for NADB, clean and efficient energy projects can include alternative resources such as wind, solar, and efficiency improvements. Currently, NADB is involved in the development of several of these types of projects, including wind energy projects, a biomass energy project, and several solar energy projects. The first energy efficiency projects are expected to be presented to the NADB Board of Directors for financing in early 2005, with additional projects to follow later in the year.

NADB hopes to augment these advances by seeking additional project proposals from private and public sector entities interested in exploring energy projects that will benefit residents along the joint border.

As this is a new area for NADB, applicants work closely with Bank staff during the initial stages to ensure both the viability of the project and that financing requirements are met. Technical assistance funds from NADB's Institutional Development Program (IDP) and Project Development Program (PDP) may be available during this phase.

Clean Energy Projects

According to Arturo Nunez, NADB Director of Project Development-New Sectors, "NADB is focusing its efforts in this new sector on projects in Mexico due to the lack of financing alternatives available to most project sponsors in this arena."

In February 2002, a governmental agency from the Mexican State of Nuevo Leon, FIDENOR, approached NADB about initiation of a wind and solar energy project. As the state government's development agency for the northern portion of Nuevo Leon, FIDENOR assists in developing renewable energy resources for public sector uses at a cost below current tariffs charged by the Mexican Federal Electrical Commission.

With financial assistance from NADB, FIDENOR set up wind and solar monitoring stations in locations throughout the region to conduct site-specific monitoring to determine the feasibility of building a utility-scale wind farm. Analyses indicate the wind resource is strong enough to support an economically viable project.

Although financing for the infrastructure project is not expected until 2005, NADB helped to pay for the highly important development phases with the expectation that it will become a lead financier once the project reaches that stage.

Investing in Energy Efficiency

NADB also seeks to develop infrastructure projects that promote energy efficiency in both the public and private sectors. In early 2004, NADB began working with the maquiladora industry to develop projects that reduce overall electricity, water, and gas usage in these manufacturing plants. The primary types of equipment for replacement within the facilities are lighting, control systems, air conditioning, compressed air systems, and boiler. These projects can yield energy savings of over 30%%, while covering the project cost from the savings in a three- to four-year period. The projects range in size from US$1 million to US$3 million. NADB participation is expected to be in the form of a loan for approximately half of the total project cost.

Projects for clean energy resources such as wind power are eligible for NADB financing.

Public or private sector entities interested in NADB assistance should take the following steps:

--Submit project proposal to NADB that defines environmental benefit, project details (financial and technical), and project status

--Obtain preliminary opinion from NADB on financial viability and authorization-to-proceed from the Board of Directors

--Apply for project certification from Border Environmental Cooperation Commission (BECC) and make formal request for financial support from NADB

--Obtain BECC certification and NADB credit/financial analysis

--Secure approval of financing package from NADB Board of Directors

Parties interested in obtaining NADB financing for energy projects are strongly encouraged to contact the NADB's Project Development -- New Sectors Department to discuss their proposals prior to submission.

For more information on the NADB, visit www.nadb.org.

The North American Development Bank, created in 1995 under the auspices of NAFTA, is a financial institution established and capitalized in equal parts by the United States and Mexico for the purpose of financing environmental infrastructure projects along their common border. The NADB's original environmental sectors include water, wastewater and municipal solid waste. In November 2000, the NADB Board of Directors authorized an expansion of its mandate to include a variety of new environmental sectors, including air quality improvements, solid waste reduction/recycling, and other pollution prevention efforts. Since its inception, the NADB has approved US$688 million in loans and grants to support construction of 83 environmental infrastructure projects in communities on both sides of the U.S.-Mexico border.