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Panama will expand coverage and quality of water and sanitation services with IDB loan

Panama will expand coverage and improve the quality of water supply services and sewer systems in cities near its capital and in its central and western provinces with a $40 million loan approved by the Inter-American Development Bank.

The program will finance projects in the in the provinces of Bocas del Toro, Coclé, Chiriquí, Herrera, Los Santos, and Veraguas, which collectively are home to a third of Panama’s total population. It will also fund projects in the cities of Arraiján and La Chorrera , which are part of the Panama City metropolitan area.

In all cases, the program will seek to expand coverage of water and sanitation services to homes that still lack them, but also to improve the continuity and quality of services in homes that are already connected. In addition to constructing new infrastructure, this goal is to reduce leaks and reduce the number of service interruptions so that customers have access to potable water supply around the clock. The program will also work to expand wastewater collection and treatment.

Part of the IDB loan with be used to strengthen the financial and institutional capacity of IDAAN, Panama’s public water utility, to enable it to provide quality water and sewer services on an efficient and sustainable basis.

These activities will include measures to provide IDAAN with autonomy similar to that of commercial firms, create a more independent corporate governance structure, improve administrative and operational management, and move forward in fulfilling universal coverage goals.

Finally, part of the IDB loan will be used to investment in equipment that will improved the energy efficiency of IDAAN’s water treatment and distribution infrastructure, since electricity is currently one of the utilities principal operating costs.

The IDB loan is for 25 years with a four year grace period and an interest rate based on LIBOR. The Government of Panana will provide $10 million in local counterpart funds.

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