He Inter-American Development Bank (IDB) approved a US$ 500 million loan to promote the fair and sustainable energy transition in Ecuador, which is in addition to the US$ 100 million from the Korea Facility for Co-financing Infrastructure Development for Latin America and the Caribbeanadministered by the IDB.
The US$500 million loan, which also focuses on promoting public and private investment, is for 19.5 years of amortization, with a six-year grace period and an interest rate based on SOFR, the IDB said in a statement on Thursday.
The US$100 million Korean Facility funds are for a 15-year term, with a three-year grace period and 2.5% annual interest.
The loans also aim to improve energy efficiency, encourage the participation of women and people with disabilities in the electricity sector, and promote electric mobility.
The IDB is confident that this will increase private sector participation in the provision of electric services and guarantee universal access to electricity for all Ecuadorians.
The operation is the second in a series of Programmatic Policy-Based Loans (PBP) loans, consisting of two contractually independent but technically linked loans.
The programme’s reforms are expected to contribute significantly to reducing greenhouse gas emissions and achieving the Sustainable Development Goals (SDGs).
The IDB estimates that more than 80,000 households, especially in rural and marginal urban areas, will benefit from improved access to electricity services, including communities in the Galapagos Islands and grid-connected shrimp farm users who have replaced fossil fuels with electricity.
There will also be new employment opportunities generated by the private sector through the expansion of renewable energy and electric mobility.
The loan will also be used to build an electrical interconnection between Ecuador and Peru, with a 500,000 volt transmission line.
The funds will be supplemented by another US$125 million loan from the European Investment Bank (EIB) to support the cost of the project in Ecuador, the total investment of which will amount to approximately US$289 million.
These two loans will be used to build 280 of the 550 kilometers of the 500,000-volt line that will run from Guayaquil (Ecuador) to Piura (Peru), which is a key element of the Andean Electrical Interconnection System.
The program will also develop and implement innovative technologies, such as distributed generation and electric mobility, which will not only strengthen the country’s energy infrastructure but will also promote the adoption of more sustainable and efficient practices.
To ensure that all sectors of society benefit equitably, the IDB said in its statement that public consultations and education and training programs for local communities will be carried out.
“This will ensure effective participation and implementation of the proposed initiatives. In addition, strong transparency and accountability mechanisms will be implemented to ensure the efficient and effective use of allocated funds, thus promoting responsible and ethical management of public resources,” the financial institution concluded.
Source: Gestion
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