Dec 6, 2006
IDB approves $18.1 million soft loan to Haiti for electricity services in Port-au-Prince
Support for project to stop deterioration and start recovery of state-owned utility
The Inter-American Development Bank today announced the approval of an $18,090,000 soft loan to Haiti for a project supported by the international community to reverse the deterioration of electricity services in Port-au-Prince and strengthen the state-owned utility Electricité d’Haïti (EDH).
Haiti has the lowest coverage of electricity in the Western Hemisphere. Only about 10 percent of its 8.5 million people have access to limited services. The project, which is line with similar efforts backed by donor countries and multilateral agencies, will help EDH begin on its financial and managerial recovery and prepare for larger projects to sustain its services and extend coverage.
The IDB’s soft loan complements a $6 million grant from the World Bank for this project, which seeks to replicate in the Haitian capital city EDH’s successful experience in the southern town of Jacmel, where a project supported by the Canadian International Development Agency (CIDA) improved service quality, reduced losses and boosted bill collection.
Through minor repairs and a new approach towards management and customer service, the CIDA-financed project allowed EDH to stage a remarkable recovery in Jacmel, where electricity is available 24 hours a day, 75 percent of the electricity distributed is billed and 98 percent of the invoices are collected.
In contrast, in Port-au-Prince power is on only five or six hours a day, about 57 percent of the energy generated is lost and only 38 percent of the electricity billed is collected.
The IDB resources will finance the rehabilitation of electricity distribution grids to reduce technical losses and improve EDH management of client services in order to persuade more customers to pay for the electricity they consume.
The rehabilitation of electricity services is a top priority for the Haitian government and is supported both by the management of EDH and its labor union, which expressed interest in working with donors.
This project is expected to reduce the financial burden a collapsing EDH represents for the Haitian government and prepare the utility for larger investments in the medium term.
The loan is for 40 years, with a 10-year grace period. The annual interest rate will be 1 percent during the first decade and 2 percent thereafter.
- Peter Bate