The Inter-American Development Bank (IDB) has approved a $150m loan for Ecuador to help the country expand, strengthen and improve the operational efficiency of its power sector.
The 25-year loan includes a 7.5-year grace period, LIBOR-based interest rate, and an additional $89.1m in local counterpart funds.
The Japan International Cooperation Agency (JICA) will provide an additional $70m parallel financing through its Cofinancing for Renewable Energy and Energy Efficiency (CORE) mechanism.
JICA is expected to approve the funding by the fourth quarter of 2017.
The funding will support the Ecuador government’s energy matrix transmission program, which also aims at reducing the use of fossil fuels, besides strengthening and expanding the transmission and distribution system.
The program is also aimed at improving the transmission infrastructure in the Andean region.
Under the program, priority will be given to the agro-industrial sector in the use of electricity, promote greater coverage of electricity in rural and marginal urban areas, and foster gender equality in the electricity sector.
Ecuador has faced frequent energy crises due to shortage of electricity, poor quality of power infrastructure, high levels of losses, low coverage and poor service.
To overcome these problems, the Ministry of Electricity and Renewable Energy implemented the Energy Matrix Transition strategy in 2013 to improve the supply, reliability and quality of electricity and boost social welfare and economic development.
The strategy also aims at Ecuador’s active participation in the Andean regional electricity market.
The IDB, which facilitates long-term financing for economic, social and institutional development in Latin America and the Caribbean, has been supporting the efforts of the Ecuadorian power sector to increase and diversify energy generation and ensure access to electricity.