The tripartite agreement enables the sale of receivables for subsidized EPC projects in the Czech Republic
June 9th 2022
In the Czech Republic, the receivables from most of the EPC projects in the public sector have been sold to one of the two commercial banks offering their services based on standardized contractual arrangements since 2007. The EPC provider (ESCO) sells receivables to the bank after the implementation of the energy saving measures, and thus obtain funding for other projects.
Until recently, however, such refinancing was not allowed for projects that used subsidies from the Operational Programme Environment (OPE) operated by the State Environmental Fund (SEF). The reason was that the subsidy program, which always financed only a part of the contract, strictly required that the remaining part of the project costs to be reimbursed within 10 days after the subsidy was provided. At the same time, each payment had to be supported by a bank statement, which proved that the client had paid the amount from his bank account. However, this was not possible in the case of the sale of receivables, because in such a case the provider will receive the payment for receivables from the bank, not from the client.
Therefore, the effort was made to find a way to meet the requirements of the subsidy program and at the same time allow refinancing so that the EPC provider can eliminate the long-term debt burden. After complex negotiations, a tripartite agreement was proposed, which replaced the required proof of reimbursement of the cost by the client. The agreement obliges the bank, the provider and the client to take a common procedure in the form of preparing the sale of receivables before receiving the subsidy and transferring funds to the provider no later than 10 days after receiving the subsidy. The agreement of the three parties was gradually negotiated and amended so that the grant provider could accept it as a replacement for the proof of payment by the client and was subsequently included by the SEF in the rules for the OPE beneficiaries. The tripartite agreement will then be tested on several projects and possibly further improved. It will gradually become a standard part of the OPE making it more accessible for the EPC projects
Authors: Jaroslav Marousek, Jana Szomolanyiova – SEVEn – The Energy Efficiency Center