US$64M IDB/EU funds cleared for GPL improvements

As announced recently by the Guyana Power and Light, the IDB and the EU have put together a US$64M financing programme to cut the utility’s losses among other areas.

The IDB press release issued today on the project follows:

The Inter-American Development Bank (IDB) has approved loans totaling approximately US$37.6 million and has also secured non-reimbursable investment financing from the European Union totaling approximately US$26.9 million to help boost the efficiency and reliability of Guyana’s power system through electricity loss reduction measures, improvements in the operational capabilities, and strengthening the management and corporate performance of the country’s utility, Guyana Power and Light, Inc. (GPL).

Reducing overall electricity losses can improve GPL’s financial performance, while alleviating the government’s fiscal commitments with regards to the energy sector. Guyana is expecting a significant increase in electricity consumption during the next decade as a result of the growth of its residential and commercial sectors and the expected return of large customers to the national power grid.

GPL is now facing various challenges in trying to provide additional electricity on an efficient and reliable basis, which include high levels of electricity losses. As Guyana’s energy demand increases, the distribution infrastructure will experience greater stresses, and in turn, this will challenge GPL’s management and its ability to manage electricity supply.

Previous IDB experience in Guyana and other countries in the Latin America and Caribbean region have proven the importance of approaching electricity loss reduction measures in a way that tackles both technical and commercial losses, while highlighting the value of supporting improvements in management practices and operational systems.

The Power Utility Upgrade Program is designed as a holistic, integrated approach to support GPL with financing for critical infrastructure investments and technical support for GPL’s key business areas. This support should increase GPL’s overall performance, reinforce GPL’s operational capabilities, and the achievement of a sustained trend in overall loss reduction.

The three main components of this loan reflect this approach with the following expected results: (1) a sustained trend in overall loss reduction; (2) an improved and accountable management performance against consistent Key Performance Indicators and within minimum international standards; and (3) more modern, efficient, and reliable operational systems in GPL.This new program will rehabilitate approximately 830 kilometers of GPL’s distribution network by implementing an integral approach to tackle overall losses while strengthening GPL’s management and technical capabilities.

Under the IDB’s new and innovative Grant Leverage Mechanism, the Guyana Power Utility Upgrade Program will be the first to be co-financed with IDB resources and those to be provided on a non-reimbursable basis by the European Union’s Caribbean Investment Facility (CIF).

The total estimated budget is US$64,573,000. The IDB’s financing will consist of up to US$22,500,000 in credit from Ordinary Capital loan resources for a 30-year term, a 6-year grace period. A second IDB credit will total up to US$15,141,750 Ordinary Capital/Fund for Special Operations “parallel loans” for a 40-year term with a 40-year grace period.,. The European Union is expected to contribute €19,375,000 (equivalent to US $26,931,250) through a Project Specific Grant (PSG), which will be administered by the IDB.

 

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