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Cañaveral-Río Lindo hydroelectric power plant to boost capacity with support from the IDB

Upgrade will allow for recovering and conserving generation of renewable electricity for at least 30 years

The Inter-American Development Bank (IDB) has approved a $23 million loan to Honduras that is earmarked for overhauling the generation infrastructure at the Cañaveral – Río Lindo hydroelectric power plants; updating facilities that link them to national interconnected system (SIN); and improving the operational and commercial efficiency of generation management at the National Electrical Energy Company (Empresa Nacional de Energía Eléctrica (ENEE).

This project will be executed by ENEE with the goals of recovering and retaining renewable-based electricity generating capacity and contributing to the security of the country’s electricity supply. It is expected to yield the following benefits: (i) prolonging the operating life of the facility by at least 30 years; (ii) ensuring supply of at least 10 percent of the country’s electricity demand at a lower cost; (iii) improving generation efficiency and increasing installed generating capacity by 20.8 MW; (iv) reducing CO2 emissions; and (v) improving business management of electrical generation.

The Cañaveral – Río Lindoplant is located in the Cortés region, 130 km (82 miles) northeast of Tegucigalpa. It was Honduras’ first hydroelectric power plant. Construction began in 1960 and 1964 and two units at the Cañaveral plant of 14.5 MW each came on line. In 1971, the first two 20 MW units came on line at the Río Lindo plant, while in 1978 units three and four, also generating 20MW, came on line for a total installed capacity of 109 MW. The facility accounts for 35% of the hydroelectric power generated by the state, and 9.6 percent of the overall national electricity supply. 

“The IDB acknowledges the country’s effort in the process of reforms designed to enhance the sector’s financial sustainability, security and efficiency. This hydroelectric complex is vital for energy generation and the operation of the National Interconnection System (SIN) and its synchronization with the Central American Electrical Generation System, producing with the lowest generating cost in the country,” said IDB project team leader Carlos Jacome. 

The IDB and the Japan International Cooperation Agency (JICA) will finance the project under the framework agreement for Co-financing Renewable Energy and Energy Efficiency Projects (CORE), which was established between the IDB and JICA in 2012 and modified in 2014. The cost of the project is estimated at $167.2 million. JICA will provide $135.4 million for overhauling and upgrading the generating units. The IDB will contribute $23 million to restore electrical substations and strengthen ENEE’s power generation company. The local contribution will be $8.8 million.

The IDB’s $13.8 million loan comes from the bank’s ordinary capital and is over 30 years, with a grace period of six years and an interest rate pegged to the LIBOR. The project also features financing from the Fund for Special Operations to the tune of $9.2 million, with a reimbursement and grace period of 40 years and an interest rate of 0.25 percent.

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