IDB approves $51.6 million loan to boost electricity sector in Bolivia

The program is the first of two operations under the Programmatic Policy-Based Lending modality which will help improve the sustainability of the electricity sector in Bolivia

The Inter-American Development Bank (IDB) has approved a $51.6 million loan for Bolivia which will strengthen sustainable development of the electricity sector, including the promotion of renewable energies such as geothermal, solar and wind power. Today, 80 percent of the electricity that Bolivia produces comes from fossil fuels and the rest from renewable sources.

This funding will also boost efficient use of energy and contribute to universal access to electricity. Currently, Bolivia's electrical power service coverage is estimated at 90 percent but the challenge remains of reaching the remaining 10 percent, which to a large extent includes rural areas.

In a bid to close that gap, the government of Bolivia approved the National Economic and Social Development Plan for 2016-2020 (known as the PDES in Spanish) which spells out goals, results and sector-by-sector action over the medium term, with the pillars of the so-called Patriotic Agenda 2025. For the electricity sector the PDES establishes energy sovereignty, the universalization of electrical power service, a boost in use of renewable energy sources and energy integration and security.

This Programmatic Policy-based Loan (PBP) is in line with the goals set out in the PDES for 2016-2020, as it will generate benefits through the diversification of the electricity grid with renewable energies, both conventional and non-conventional, that will help cut greenhouse gas emissions. Benefits are also expected through the export of surplus natural gas and lower costs of generating electricity.

The program also features a gender equality component. The Bolivian energy sector, particularly the part involving electricity, is a major source of employment and revenue. This led the National Electricity Company, or ENDE, with the support of the IDB, to carry out a gender study to understand the low representation of women in the company and boost its policy and operational framework so as to achieve greater gender equality. The results of the study prompted the development of recommendations and guidelines for coming up with a gender policy and action plan within the company.

The program approved foresees total lending of $51.6 million. Of that, $43.86 million is from regular ordinary capital that is to be paid back by 2033 and with an interest rate pegged to the LIBOR, while $7.74 million is concessional ordinary capital granted over a span of 40 years, with a 40 year grace period and an interest rate of 0.25 percent.