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IDB and Energy

The Inter-American Development Bank’s energy portfolio includes a wide array of investments aimed at improving the energy security of its member countries by exploiting both conventional and renewable sources.

In 2007 the Bank approved US$2.5 billion in energy-related operations. Many of these loans will support high-priority gas and electricity infrastructure projects. For example, the IDB approved:

  • A US$32.7 million loan for a wide-ranging investment program to strengthen Nicaragua’s electricity system.

  • A US$87.8 million loan for the construction of a dam in Ecuador that will supply water to the Marcel Laniado de Wind hydroelectric generation plant, thereby enabling it to produce an additional 388GWh of electricity per year.

  • US$400 million loan for a liquefied natural gas (LNG) project in Peru that will cost a total of US$3.9 billion and will represent the biggest private investment in Peru ever.

  • A US$381 million non-sovereign guaranteed loan operation to refinance part of the debt of Instituto Costarricense de Electricidad (ICE), Costa Rica’s national power and telecommunications institution, plus a US$500 million conditional credit line to support ICE’s 2008–2014 investment program.

More significantly, in 2007 the IDB launched the Sustainable Energy and Climate Change Initiative (SECCI), which will support economically and environmentally sound energy options and effective responses to climate change in Latin America and the Caribbean.

The core objectives of the SECCI, which was launched with a US$20 million contribution from the IDB, are to expand the development and use of renewable energy sources, energy efficiency technologies and practices, and carbon finance in the region, as well as to promote and finance climate change adaptation strategies that reduce the region’s climate vulnerability.

SECCI grants are being used by IDB clients to assess the feasibility of adding biofuels to their energy matrix, primarily through technical cooperation grants, studies and consultancies. Key questions addressed by efforts include market and demand issues, land use and environmental impact, regulations and pricing, logistics and distribution, and potential impacts on jobs and food prices. 

Examples of recent SECCI grants include:

  • US$830,000 grant to promote technological development for biofuels in Colombia.

  • US$750,000 for feasibility studies of biofuels production in Haiti, El Salvador, and the Dominican Republic. These studies are part of an agreement between the United States, Brazil and the IDB to promote biofuels in the region.

  • Funding for an overall study of agricultural, economic and environmental viability of ethanol production in Guatemala, Honduras, Nicaragua, El Salvador, Costa Rica, Panama and the Dominican Republic.

The IDB is also supporting renewable energy through its traditional public and private sector lending operations. In 2007, for example, the IDB approved private sector financing for a total of US$120 million to Brazil’s Usina Moema Açúcar e Álcool Ltda., a major sugar, ethanol and bio-energy producer based in the State of São Paulo. Several other large senior debt financing operations for Brazilian ethanol producers are in the IDB’s pipeline.