ELECTRIC ENERGY

Objectives

• To contribute to the economic and social development of member countries through loans and technical cooperation for the financing of projects which will increase the availability and reliability of electricity to meet efficiently the increasing long-term needs of government, industry, commerce and residential consumers, both in urban and rural areas.
• To foster long-range planning for the efficient use and development of electric energy sources; the establishment of adequate energy conservation practices and policies; and the establishment of appropriate tariff structures which give due attention to efficiency and equity considerations, taking into account the need to make the benefits of electrification available to the lowest income groups.
• To foster regional integration through national and multinational projects and interconnections which facilitate development and economic utilization of renewable sources of energy produced from such sources, to obtain optimum utilization and to increase the assurance of supply.
• To strengthen electric energy related institutions by providing assistance which will improve planning and management in the operational, financial and technical areas.
• To foster electric energy production which substitutes the use of renewable energy resources for non-renewable resources.
• To foster the transfer and adaptation of electric energy technology in accordance with the science and technology policy.

Fields of Activity

1. ELECTRIC ENERGY GENERATION, TRANSMISSION AND DISTRIBUTION. In this sector the Bank participates primarily through financing of electric generation and transmission projects. The Bank will consider projects which contemplate the utilization of traditional sources of energy, such as hydro-electric and fossil fuel generation as well as non-traditional sources. However, the Bank will not finance electric energy investments which are dependent upon experimental or prototype equipment.

Given the fact that the development of subtransmission and distribution systems has not kept pace in Latin America with recent advances in generation and high voltage transmission construction, and to prepare electric distribution systems toward a higher density consumption, the Bank will consider financing the study and development of priority improvements and expansions of subtransmission and distribution systems in the large urban and industrial centers of Latin America where the principal growth in consumption is presently occurring.

2. RURAL ELECTRIFICATION. Notwithstanding the necessity to continue financing the expansion of urban distribution systems, the Bank assigns high priority to technical cooperation and direct lending for the study and implementation of rural electrification projects. In this respect, the Bank will seek to finance rural electrification programs through rural cooperatives when feasible, adopting existing technology to the realities of progressive increases in the demand for electricity in the rural areas of Latin America, in such manner that the largest number of projects would be feasible with the same resources.

3. ELECTRIC LONG-RANGE SECTOR PLANNING. To insure that generation and/or transmission projects financed by the Bank are the product of appropriate system planning which includes least cost alternative analysis, the Bank requires borrowers to have done or to undertake electric generation, transmission and distribution studies leading to the preparation of long-range energy development master plans. If assistance is necessary the Bank stands ready to finance the preparation of such studies under its technical cooperation programs. The Bank can also provide technical cooperation for the formulation of national energy policies.

Basic Criteria

In the analysis of proposed projects, the Bank will seek to determine if such projects fulfill the following basic criteria:

• Are least cost alternative projects which are part of optimal long-range expansion programs of the system being developed.
• Are environmentally acceptable, with emphasis placed on measures to preserve the quality of air water and soil which could be affected by the project. To the extent possible, every effort will be made to analyze the investments impact on the area's ecological balance. The projects should be formulated taking into account the need for preserving and improving the environment.
• Pertaining to rural electrification, are consistent with and complement an acceptable rural development program as an element of infrastructure.
• Place due emphasis on the conservation of natural resources to be utilized in the production of energy, and/or contribute to the conservation of non-renewable energy resources.
• Promote, as appropriate, electric power projects of multinational scope which would accelerate the economic integration process of the region, as well as projects for multiple utilization of hydrological resources.
• Include a program of compensation for persons affected by the electric generation and transmission works.

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Prevailing Reference Document:
GP-96-1, February 1985,
GP-92-2, April 1985.