$5 million loan to improve power grid’s operation and maintenance, support energy conservation efforts
The Inter-American Development Bank (IDB) approved a $5 million loan to help boost the efficiency of Guyana’s power system through electricity loss reduction measures and improvements in the operation and maintenance of the distribution network.
Experience under a previous IDB loan for Guyana’s electricity sector revealed the importance of focused commercial loss reduction actions and the relevance of technical loss reduction actions in lowering levels of electricity losses. The country’s main utility, Guyana Power and Light Ltd. (GPL), has estimated that more than half of its technical losses are attributable to deficiencies in the country’s 4,000 kilometers low-voltage network, 75 percent of which is in need of upgrading.
This new program will rehabilitate a portion of the distribution network and continue a series of commercial loss reduction actions while financing capacity building and energy conservation activities. At the end of the program’s four-year implementation period, both the number and duration of power cuts are expected to decline by 40 percent, while the ratio between electricity supplied and electricity paid for by customers is expected to rise from the current 67 percent to 73 percent.
The operation will help to improve the quality of service provided by the utility and strengthen its technical capabilities. It will also promote the efficient use of energy and the culture of payment, in a system where nearly one-third of the electricity generated in 2010 was lost for either commercial or technical reasons.
The loan consists of a $2.5 million credit from the Bank’s concessional Fund for Special Operations for a 40-year term, with a 40-year grace period, and at 0.25 percent interest rate, plus another $2.5 million credit from the IDB’s ordinary capital. The second credit will have a 30-year term, a 6-year grace period and a variable interest rate based on LIBOR. The Government of Guyana will provide an additional $500,000 in local counterpart funds.