UOB Malaysia has on Monday announced that it will provide MYR 1 billion ($230 million) to support Malaysia’s oil and gas services and equipment (OGSE) sector decarbonization and energy transition journey.

In a statement, the banking group announced the launch of its Sustainable Vendor Financing Program (SVFP) for the sector.

As part of the program’s debut, the bank is allocating up to MYR 1 billion ($230 million) for the purpose of financing OGSE suppliers participating in Petronas Suppliers Support Program (PSSP).

According to the statement, the SVFP comprises transition financing solutions with competitive rates tailored for OGSE companies participating in PSSP.

It also includes meaningful incentives for these companies to kickstart their decarbonization initiatives such as the adoption of renewable energy, improvement of energy efficiency, emission reduction measures and fleet electrification.

“The launch of the Sustainable Vendor Financing Program reflects our commitment to helping Malaysia’s OGSE sector transition towards sustainability,

“As Petronas is our valued partner, we are pleased to extend our support to their suppliers, which are predominantly small-and-medium-sized enterprises, to help them embark on their decarbonization journey,” said Ng Wei Wei, Chief Executive Officer of UOB Malaysia.

She added this will also help the country’s OGSE sector stay competitive in the global value chain, with heightened expectations on ESG-related regulations being implemented across the world.

According to the statement, the SVFP also introduces measures for OGSE companies to track and demonstrate progress in their sustainable practices.

This includes completing capacity-building modules, establishing baseline greenhouse gas (GHG) reporting and demonstrating annual GHG reductions.

It is noted that in 2019, UOB Malaysia worked closely with Petronas on a Vendor Financing Program that provided financial certainty to OGSE suppliers, enabling these suppliers to focus on delivering their projects on-time and on-target.

The relationship is further strengthened with the newly launched SVFP that comes under UOB’s Transition Finance Framework (TFF).

Developed by the bank’s Sector Solutions Group, a dedicated team of sector and sustainable finance specialists, UOB’s TFF offers a suite of banking solutions to companies across hard-to-abate sectors working on reducing their carbon emissions or developing low-carbon projects, such as biofuel refineries and carbon capture & storage initiatives.

UOB’s TFF has received a second-party opinion that verifies the framework is in line with internationally recognized climate finance principles, providing assurance of its alignment with global best practices for financing hard-to-abate sectors.

With this framework, companies in the energy sector can establish resilient supply chains while meeting governance requirements.

UOB Malaysia has over seven decades of presence in Malaysia, and operates 55 branches nationwide, offering both conventional and Islamic banking services to its customers.

The bank is a subsidiary of Singapore-based UOB, a bank in Asia with a global network of around 500 offices in 19 countries and territories in Asia Pacific, Europe, and North America.

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