CR-T1190 : Support for Financial Sustainability and Competitiveness of the Costa Rican Electricity Institute (ICE)

Industrial rates in Costa Rica are, in recent years, among the highest in the Central American region, which, according to business and industry organizations, is affecting productivity and business competitiveness, and foreign investment attraction to the country. In this regard, the Government of Costa Rica has requested the support of the Inter-American Development Bank (IADB) to: (i) provide support and technical assistance to the ICE Group in the process of modernization and change required by the institution to face and respond to strong changes that will come in the future in Costa Rica´s electrical sector, associated with greater penetration of renewable sources, the increase of distributed generation, the insertion of electric transport, the implantation of storage technologies, and in the activities to develop the leadership attributed to the Costa Rican Electricity Institute (ICE) by the new authorities of the country in the process of decarbonization of the economy of Costa Rica; and (ii) provide the Costa Rican Public Services Regulatory Authority (ARESEP) with technical support to improve the tariff model of the electricity sector and improve the electric planning process, with the purpose of the tariff structure to provide the appropriate signals to stimulate the efficiency in the provision of the service by the regulated companies, and the saving and the efficient use of energy. The main objective is to boost efficiency in the electricity services provision to promote cost reduction of supplying and improving Costa Rica's productivity and competitiveness. Specific objectives are: i) Strength the Corporate Governance of the Costa Rican Institute of Electricity (ICE) and its organizational structure, in order to support and promote the institutional and communicational strategy, take advantage of synergies between business areas, promote transparency in management and accountability, optimize processes to make them more efficient and effective, avoid duplication, overlapping and fragmentation of responsibilities, leading an adequate management of human capital; ii) Provide technical support to the activities to be developed by ICE within the decarbonization process of the Costa Rican economy; and iii) Reinforce and technical support and assistance to the Public Services Regulatory Authority of Costa Rica (ARESEP), in coordination with ICE, to review and redesign the electricity tariff structure, including the generation, transmission and distribution sub-sectors, as well as its implementation.