Bank of the Philippine Islands (BPI) has set aside P5 billion for its energy financing program to encourage clients mostly mall operators and manufacturers to be more energy efficient.

The bank has tapped the World Bank’s IFC Corp. for a 50-50 risk-sharing and so far, loans for sustainable energy financing (SEF) have reached P2 billion.

BPI Vice President Angeline Hwang told reporters over the weekend that with the IFC guarantee, the bank was able to release bigger amount of loans such as a P230 million extended to Sheridan Beach Resort and Spa at Sabang, Puerto Princesa City in Palawan.

Hwang said since the loans were secured by IFC, the interest rate is flexible and dependent on the credit standing of the borrower.

BPI President Aurelio Montinola III has said that SEF loans, which have maturity of three to five years, will enjoy lower rates. To encourage more borrowers under the energy programs, the bank may reduce interest rates on the loans by a percentage point.

The country is considered one of the most expensive users of energy resulting to higher power costs.

BPI Senior Manager Nanette Biason for SEF specialized lending unit, said they expect the loan portfolio to reach P5 billion by 2011. “The loan term maximum is 10 years and we want to diversify more to buildings and manufacturing companies that want to upgrade their equipment,” she said.

According to IFC officials, the Philippines have a requirement of at least $1 billion to fund sustainable energy projects. BPI said IFC opened the loan facility because they believe local banks have reached a level of maturity.

BPI has already spent over P100 million to upgrade its facilities for energy efficiency.

Based on World Bank estimates, companies that embark on sustainable energy projects by using more energy efficient products and systems can save some 20 to 33 percent on costs.

BPI’s biggest showcase project under its SEF facility with IFC is Palawan’s newest 90-room Sheridan’s “green” hotel in Sabang.