Ecuador will advance its energy matrix transmission program by expanding, strengthening, and improving the electrical system’s operational efficiency with a $150 million loan approved by the Inter-American Development Bank (IDB).
The program will support the Government of Ecuador’s efforts to bridge the gap in access to electricity coverage, increase the nation’s energy efficiency, expand its national electrical system and boost its reliability, reduce the use of fossil fuels, and improve the power sector’s operational efficiency.
The program will strengthen and expand Ecuador’s National Transmission System and the National Distribution System, facilitate effective transportation and distribution of energy on the national level, and enhance the nation’s transmission infrastructure to allow for the increased exchange of energy in the Andean region.
This project will facilitate the priority use of electricity in the agroindustrial sector, and will promote higher electricity coverage in rural and marginal urban areas. The project will foster gender equality in Ecuador’s electricity sector as an important component.
Ecuador experienced recurring energy crises during the 1995-2010 period due to electricity shortages and the poor quality of its power infrastructure. Ecuador’s electricity sector had systematic weaknesses, with prevailing high levels of electricity losses, and low coverage and poor service quality rates.
Since 2013, Ecuador’s Ministry of Electricity and Renewable Energy has implemented the Energy Matrix Transition strategy, which seeks to boost social welfare and economic development by improving the supply, reliability and quality of electricity service as well as Ecuador’s active participation in the Andean regional electricity market.
The IDB’s country strategy with Ecuador includes the support for the power sector’s efforts to encourage the sustainable increase and diversification of energy generation, transport and distribution capacity, system reliability, energy efficiency and universal access to energy. This project contributes to create a long-term energy strategy that promotes a sustainable energy framework, facilitates adequate energy supply, and improves access to electric power.
The IDB loan of $150 million is for a 25-year term, including a 7.5-year grace period and interest rate based on LIBOR. It includes an additional $89.1 million in local counterpart funds. An additional $70 million corresponds to parallel financing from the Japan International Cooperation Agency (JICA) through its Cofinancing for Renewable Energy and Energy Efficiency (CORE) mechanism; this funding is pending approval by JICA’s by the fourth quarter of 2017.
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
Carlos B. Echeverría
IDB Project Team Leader
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