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IDB and European Union commit funds for programs to improve electricity, water, sanitation services in Guyana

The Inter-American Development Bank (IDB) and the European Union (EU) are committed to supporting the efforts of the Government of Guyana to improve the quality and delivery of reliable water supply and also to strengthen the reliability and efficiency of electricity service delivery. In this regard, both organisations met today to sign a loan and investment grant agreement with the Government of Guyana. The signing took place at the IDB’s headquarters in Washington, D.C. on October 10, 2014 with the participation of IDB President Luis Alberto Moreno, Guyanese Finance Minister Ashni Singh, and European Union Commissioner Andris Piebalgs.

Both the EU and the IDB recognize the need to assist Guyana's continued development through investments in the energy and water sectors and have therefore allocated US$54,480,000 of IDB resources, further leveraging up to US$41,769,500 through the European Union’s Caribbean Investment Facility (CIF) to address the priority needs of these sectors. IDB financing comprises US$24,480,000 in blended resources from the Fund for Special Operations (FSO) and Ordinary Capital (OC), as well as US$30,000,000 from the Grant Leveraging Mechanism (GLM). The EU contribution represents sixty percent of the total 10th European Development Fund national allocation for Guyana totalling US$68,300,000. This is the first IDB project using the Grant Leveraging Mechanism, which leverages grant resources from bilateral and multilateral donors with US$100million of the IDB’s ordinary capital to finance operations in shared priority areas for some of the poorest countries in Latin America and the Caribbean region.

Guyana will strengthen and improve access to drinking water and sanitation services with a US$16,838,250 loan from the IDB and a US$14,838,250 grant from the Caribbean Investment Fund of the European Union. The Program to Improve Water and Sanitation Infrastructure and Supply will finance infrastructure projects to build, upgrade and expand water treatment plants as well as to enhance access to adequate sanitation through measures to strengthen the Guyana Water Incorporated (GWI). The IDB-EU program is expected to increase the percentage of households with 24-hour access to water and water pressure that is in line with national standards, reduce the percentage of water that goes unaccounted for and raise the number of homes with improved access to drinking water and proper sanitation arrangements. The program will also fund the design and implementation of an initiative to reduce Non-Revenue Water and a public awareness campaign on the use of water and proper hygiene practices.

In addition, the Inter-American Development Bank approved a loan totaling US$37,641,750 and a US$26,931,250 grant from the Caribbean Investment Fund of the European Union to help boost the efficiency and reliability of Guyana’s power system through increasing operational efficiency, reducing energy losses, and strengthening the management and corporate performance of the country’s utility, the Guyana Power and Light, Inc. (GPL). GPL is now facing various challenges in trying to provide additional electricity on an efficient and reliable basis, which include high levels of electricity losses. As Guyana’s energy demand increases due to the growth of its residential and commercial sectors and the expected return of large customers to the national power grid, the distribution infrastructure will experience greater stresses, and in turn, this will challenge GPL’s management and its ability to manage electricity supply. This IDB-EU program will fundthe rehabilitation of 830 km of distribution lines in GPL’s network.

The European Union approved the creation of the Caribbean Investment Facility (CIF) on April 30, 2012. The purpose of the CIF is to strengthen Caribbean regional integration and to foster investments in key infrastructure in the Caribbean, with a particular focus on the energy, environment, climate change mitigation and adaptation, transport and social infrastructure sectors. These projects are the first to be funded under the CIF program.