Municipal Building Fund

Alternatives and procedures for project implementation:
There are two ways for municipalities to implement their projects if they intend to benefit from concessional loans from the Municipal Buildings Fund (MBF): either by themselves or through electricity system commercial operators (ESCOs).

A) When a municipality or their authorised entities seeking financing for the modernisation/renovation of public buildings decide to implement the project directly (i.e. by themselves). In such a case, the municipality or their authorised entities should directly apply to the manager of the financial instrument – Šiaulių bankas AB (hereafter the MFI) for a preferential loan and carry out the procurement of the contractual works themselves. It should be noted that after evaluating the application submitted by the municipality or the entity designated by them, the MFI adopts a decision on granting a preferential loan.

B) When a municipality seeking financing for a project for the modernisation/renovation of public buildings decides to implement the project through an ESCO, the municipality shall carry out the procurement by the ESCO. After the award of the contract to the ESCO, the ESCO shall apply to the MFI for the granting of a concessional loan and shall arrange for the contracting works necessary for the implementation of the project. Municipalities seeking to implement public building modernisation/renovation projects using the ESCO are advised to follow the Annex ‘On the approval of the standard documents for the implementation of the Electricity System Commercial Operator (ESCO) model’ (hereafter referred to as the ‘ESCO agreement’). This was approved by Order No 1-221 of the Minister of Energy of the Republic of Lithuania of 23 September 2015 (available here), which sets out the standard terms and conditions of the Contract between the municipality and ESCO.

Main terms of the loan:

• The financial instrument is a preferential loan.
• The amount of funds allocated is EUR 36.17 million.
• The final beneficial owners are municipal administrations.
• Potential project promoters are municipal administrations, companies acting as municipal administrators and ESCO companies (ESCO companies must contribute their own funds in the implementation of the project).
• The preferential loan is granted to municipalities or entities designated by them up to 100% of the project value. The loan is granted to ESCO companies up to 80% of the project value (the remaining 20% of the project value is provided to the ESCO).
• The applicants must contribute their own money.
• The interest rate is from 0.9% to 1.5% + 6 months EURIBOR (but not less than 0%).
• Additional collateral (e.g. a pledge on an account) may be requested from project promoters.

Projects must comply with the provisions of Paragraph 13 of the Programme for Improving the Energy Efficiency of Public Buildings (hereafter ‘the Programme’):

• The implementation of the project must improve the energy efficiency of public buildings by achieving at least energy performance class C, increase or maintain the existing efficiency of the use of the area of public buildings.
• To increase the energy efficiency of public buildings or to save energy, applicants must choose the actions (means) specified in Annex 2 to the Energy Efficiency Improvement Programme. This includes modernisation of heating/cooling and hot water engineering systems, modernisation or installation of ventilation and/or recuperation systems, replacement of windows with lower thermal transmission windows).
• At least 51% of the total floor area of the building must be owned by the municipality and at least 51% of the total floor area used by the building managers referred to in subparagraph 4.8 of the Programme. There must be a written agreement of the owners of all the building premises regarding the implementation of the energy efficiency project of the building.
• The project must ensure that the selected public building for which the investment project is to be prepared will be used for at least 10 years after the implementation of the energy efficiency improvement project in accordance with the intended use.

More detailed information for potential applicants of the Municipal Building Fund (MBF) and interested parties can be found in the MBF Project Implementation Guide for Applicants*, which can be downloaded by clicking on this link.

* Please note that this guide is of a recommendatory nature and certain aspects may differ according to the municipal internal rules of procedure or other circumstances.

The matching calculator for the list of actions/measures for the renovation of public buildings (Annex 2 of the Programme) may also be consulted, which can be found by clicking on this link.