Procedures for Application for a Development Loan
Request for Loan
An official request should be submitted by the government of the beneficiary country. The request should indicate that the project is within the development priorities and should be supported by the necessary documentation such as the economic feasibility study, a cost estimate, projected cash flow and the financing plan.
Steps taken by the Fund in dealing with the Request.
The Fund reviews the submission to ensure completeness of documents and then evaluates the studies in order to assess the economic feasibility of the project and the added value that the project will introduce to the economy of the country.
The feasibility of the project is established by methods such as CBA, EIRR, NPV, sensitivity analysis etc.
The review would also cover the financing plan, expected cash flow and the evaluation of the technical and social data in order to characterize the uncertainty associated with the project.
This process will enable the Fund to develop interest in the project, allow it to send an appraisal mission and coordinate with other funding agencies involved in the project.
Subsequent to the preliminary approval, an Appraisal Mission is send to the concerned country to meet with officials in order to further assess the viability of the project. The mission will ascertain the economic conditions, the soundness of the feasibility study, the validity of the cost estimate, capabilities of the beneficiary in administering the project, the capabilities of executing, operating and maintaining the project.
The mission will further evaluate and ascertain the capabilities of the host country of repayment, their dealings with other similar funding institutions etc.
The mission prepares a comprehensive Project Appraisal Report.
Based on the Appraisal Report, a memorandum with recommendations will be raised to the Board of Directors for their approval.
This process will enable the Board of Directors to take the appropriate final decision regarding the status of the loan request.
Once the loan is approved by the Board of Directors, the beneficiary is officially notified. The draft loan agreement will be prepared and forwarded to the beneficiary for mutual agreement prior to the preparation for the signing ceremony.
Notes on ADFD Lending Policy and funding of Renewable Energy Projects:
ADFD is committed to supporting IRENA guide program by assisting in the funding of clean Renewable Energy projects in developing countries with up to AED 183 million annually over a period of seven years.
These funds will be provided in the form of concessionary loans.
The terms and condition of the loan will depend on many factors that are usually assessed at the time of extending the loan.
In general, ADFD concessionary loans rates vary between 2 to 6% with duration of 15 to 20 years and a grace period of 3 to 5 years.
ADFD funding will not cover more than 50% of estimated cost of the project.
The beneficiary country shall undertake to exempt ADFD concessionary loans from all taxes and duties.
All loans are subject to the approval of the Board of Directors.