Best Practices

Sectoral Policies*

ENERGY

Objectives

The objectives of Bank activities in this sector are:

• To efficiently meet the energy requirements of its member countries derived by the process of socioeconomic development;

• To accelerate growth and diversification of the energy supply;

• To foster energy conservation.

Fields of Activity

In addition to continuing to support electric energy generation, transmission and distribution projects and/or programs, as well as the development of hydrocarbon resources, the Bank will actively promote energy development in the region by means of loans and technical cooperation for technically, socio-economically and financially feasible projects, aimed at:

a) developing alternative sources of energy, especially from renewable resources;

b) reducing and/or replacing the utilization of hydrocarbons in the production of energy;

c) promoting the efficient use of energy;

d) creating and/or strengthening the institutional and technological base of the energy sector; and

e) mobilizing additional resources, either of internal or external origin, required for the implementation of energy projects and/or programs.

Toward these goals, the Bank may participate in, promote or support the following activities:

1. EXPLORATION. To assist in identifying and locating the various sources of energy, both renewable and non-renewable.

2. EVALUATION AND QUANTIFICATION OF RESOURCES. To quantify and evaluate those energy reserves whose development is technically and economically feasible.

3. DEVELOPMENT, PRODUCTION AND PROCESSING. To construct the physical infrastructure and production capacity required for the development, production and processing of energy.

4. TRANSPORTATION, STORAGE AND DISTRIBUTION. To develop the necessary infrastructure to permit the use of energy in urban and rural consumer centers.

5. INSTITUTION STRENGTHENING. To help create or improve the technical, administrative and operational capacity of the institutions that are directly or indirectly concerned with the development, production, supply, utilization and control of energy.

6. TRAINING AND SKILLS DEVELOPMENT. To upgrade the administrative capacity and technological level of the human resources involved in the administration, planning, programming, execution and supervision of energy systems, projects and programs.

7. DEVELOPMENT AND IMPROVEMENT OF THE TECHNOLOGICAL INFRASTRUCTURE. To facilitate the creation or improvement of the technological base necessary for the development, transfer, adaptation, standardization and dissemination of energy technologies.

8. ENERGY UTILIZATION. To bring about improved efficiency in the use of energy in the various sectors of economic activity, eliminating unnecessary consumption and maximizing the final product per unit of energy consumed, in a manner compatible with the socioeconomic objectives.

9. APPLIED RESEARCH. To study the possibilities of utilizing new sources of energy, including research toward adapting energy production procedures which, because of their technological and socioeconomic characteristics, may signify an alternative source of energy for the future of Latin America.

10. ENERGY PLANNING AND POLICY. To establish national and/or regional systems of information on the situation in the energy sector, prepare sectoral studies, and formulate plans and policies for the energy sector.

11. COOPERATION AMONG MEMBER COUNTRIES. To foster cooperation among member countries with a view to: a) joint development and utilization of their energy resources, through the execution of national, bilateral and multilateral projects; and b) establishment of appropriate mechanisms for the transfer and utilization of energy and for the adaption of new technologies for production, utilization and distribution of energy.

Basic Criteria

• In addition to applying the general criteria set forth in the Operations Policies Manual, the Bank will see to it that the following aspects receive special consideration in the projects to which it extends support, either directly in the project itself or through its participation in other sectors:

• The reliability and conservation of the energy supply and its efficient use based on the employment of technologies geared to the possibilities of the energy resources and on adequate policies with respect to use.

• Increase in the supply of energy through better utilization of installed capacity and greater efficiency in the systems of conversion.

• The energy projects or programs should preferably be part of short, medium or long-term investment plans for financing the energy sector or its subsectors and should be integrated with the socioeconomic planning at national level.

• The energy projects would serve as key elements to promote development in their areas of influence through the generation of subsidiary economic activities.

• There should be assurances that the rural energy plans and projects include, within the national energy context, the economic and physical requirements of the rural areas and rural communities and that the energy projects would contribute to the creation of new jobs in the non-farming sector to strengthen rural social and economic development.

• The projects should increase the production of renewable energy so that a greater supply of hydrocarbons will be available for use as raw material for industry (fertilizers, plastics, etc.).

• To the extent possible, the projects should help the countries to continue their programs for institutional improvements in the energy sector and contribute to a transformation of the energy supply and consumption structure in Latin America.

• The energy supply projects must be identified evaluated and designed with sufficient flexibility to assure the satisfaction of energy needs through the use of various available sources of energy.

• The activity must be such that in addition to meeting the requirement of overall financial feasibility, its benefits from the use of energy will reach the homes of the disadvantaged target sectors, consistent with the Bank's tariff policy.

• The energy projects should be conceived and designed in a manner compatible with environmental protection requirements.

• In applying this policy, the Bank will maintain close coordination with all the international agencies operating in the energy field, especially those directing their efforts to Latin America.

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