Nicaragua continues strengthening electricity sector with new financing from the IDB

The IDB has approved a $65 million loan to help Nicaragua strengthen a framework that guarantees financial and operational sustainability of its electricity sector. The program will support macroeconomic stability, ensure the sector’s financial soundness, improve transparency of its management results, and promote a sustainable energy matrix.

The program is aligned with the Government’s “Energy Sector Action Plan,” which consists of three strategic lines of work—universal access to energy, energy efficiency, and energy matrix diversification—and addresses the following challenges: (i) electricity service cost vulnerability associated with the energy matrix, (ii) high energy service costs due to system losses, (iii) lack of a consolidated sector framework for private investment, (iv) low regional market participation, and (v) the need to improve the transparency of management results.

The program is the third in a series of programmatic loans on which the Bank has worked with Nicaragua between 2013 and 2017, setting the stage for strengthening the government’s performance in the energy sector, improving the safety, reliability and quality of the supply of energy in the country, increasing regional integration in the sector and promoting environmentally sustainable development.

The activities planned beginning with approval of the first operation in 2013 have been retained throughout the series of loans, allowing for integrated solutions to challenges in the sector through the approval of reforms and institutional measures, among them the Energy Efficiency Law, reform of the Electricity Industry Law to incorporate distributed generation, actions to improve procedures for the contracting of energy, strengthening of the wholesale market to attract private investment, and modification of operational rules at the national level to mesh with those in the regional electricity market.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean.The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.