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IDB approves $60.9 million for power supply in rural Brazil

Electric power will be provided to 82 isolated Brazilian towns in three northern states with the support of $60.9 million in financing from the Inter-American Development Bank, the IDB announced today.

The private sector project will finance the installation, operation, and maintenance of 267 diesel engines for power generation with a total capacity of 125 Megawatts. The units will provide power to remote communities, which are not connected to the electricity grid, in the states of Pará, Rondônia and Acre. In most cases the new generators will replace existing ones that are either obsolete or inadequate.

The project will bring 24-hour, continuous energy supply to places where electricity is currently provided only six hours a day, with constant interruptions at high costs, for 700,000 low-income inhabitants of rural areas. Microenterprise and small business will have new developmental potential through energy sources. Access to refrigeration will improve health and diets, and schools will have possibilities of using electronic teaching equipment. The project will also contribute to environmental sustainability by improving fuel and effluent management and disposal, reducing air emissions and noise levels and improving occupational health and safety conditions for employees.

Guascor do Brasil Ltda., a private firm, will develop the project under power supply agreements with state-owned distribution companies in the three states.

The IDB financing consists of a loan from ordinary capital of $23.7 million and syndicated B-loans, one for $14.5 million that will match the terms provided by the IDB and a second tranch for $22.7 million. Funds will be provided by financial institutions under subscription of participation agreements with the IDB.

The project will be financed 35 percent with equity and 65 percent from debt.

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