IDB US$5M loan for Guyana Power and Light

The Inter-American Development Bank (IDB) yesterday announced that it has approved a US$5 million loan ($1B) to  boost the efficiency of Guyana’s power system via electricity loss reduction measures and improvements in the operation and maintenance of the distribution network.

Loss reduction and a poor distribution network have been major problems for the Guyana Power and Light (GPL) and its predecessor the Guyana Electricity Corporation. The IDB has loaned large sums to GEC/GPL in the past.

In the statement, the IDB said that experience under a previous IDB loan for Guyana’s power sector showed the importance of focused commercial and technical loss reduction actions in lowering levels of electricity losses.

It said that GPL has estimated that more than half of its technical losses are attributable to deficiencies in Guyana’s 4,000 kilometers low-voltage network, 75 percent of which is in need of upgrading.

“This new program will rehabilitate a portion of the distribution network and continue a series of commercial loss reduction actions while financing capacity building and energy conservation activities.

At the end of the program’s four-year implementation period, both the number and duration of power cuts are expected to decline by 40 percent, while the ratio between electricity supplied and electricity paid for by customers is expected to rise from the current 67 percent to 73 percent,” GPL said.

The loan will also help to improve the quality of service provided by the utility and strengthen its technical capabilities. The bank, a major financier here, said that the loan will also promote the efficient use of energy and the culture of payment, “in a system where nearly one-third of the electricity generated in 2010 was lost for either commercial or technical reasons.”

The loan comprises a US$2.5 million credit from the Bank’s concessional Fund for Special Operations for a 40-year term, with a 40-year grace period, and at 0.25 percent interest rate, plus another US$2.5 million credit from the IDB’s ordinary capital. The second credit will have a 30-year term, a 6-year grace period and a variable interest rate based on LIBOR. The Government of Guyana will provide an additional US$500,000 in local counterpart funds.

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