IDB will lend US$125 million to finance electrical interconnection between Ecuador and Peru

Ecuador will promote its electrical interconnection with Peru with a 500 kilovolt line that will be financed by the Inter-American Development Bank (IDB) with US$125 million. The project is expected to be co-financed by the European Investment Bank (EIB) for another US$125 million.

The US$125 million loan from the IDB is under the Flexible Financing Facility modality and offers the recipient country the option of requesting modifications in the repayment schedule, currency conversion, interest rate, and protection against catastrophes.

This was reported by the IDB on Monday in a statement in which it warned that the new transmission infrastructure will strengthen regional energy integration and promote the development of the Andean Electrical Interconnection System (SINEA). In addition, it will consist of a 544 km extra high voltage line between both countries.

UNITING BORDERS

The Ecuadorian section, subject of this financing, consists of 280 km of transmission lines and a new substation in Pasaje (El Oro province). The section will start from an existing substation in Chorrillos, north of Guayaquil, and will run south to the border with Peru, where the project will continue for an additional 264 km to Piura, a section that will be financed by the private sector of that country.

In Ecuador, the works will be owned and operated by the Empresa Pública Estratégica Corporación Eléctrica del Ecuador (CELEC-EP), while, for the section in Peru, the tender was made under the private concession model, which includes 30 years of Commercial Operation.

“It is expected that, after the five years of the project, the electrical energy traded between both countries will increase substantially as transmission capacity increases, from the current 80 MW to 680 MW, favoring the exchange of surplus electricity between both countries”, points out the IDB.

The new interconnection will also promote the establishment of a subregional electricity market within the framework of the Short-Term Andean Regional Electricity Market (MAERCP), established in the Andean Community regulation, which seeks to facilitate electricity exchanges in the region.

Likewise, the project includes carrying out a series of technical training courses for women in the transmission sector.

The loan has a 23-year term, with a 7.5-year grace period at an interest rate based on SOFR. Ecuador’s state power company CELEC-EP will provide another US$13.62 million in local matching funds.

With information from Bloomberg Línea