IIC signs loan agreements for renewable energy projects in Colombia
10/09/2008The loan proceeds will help increase the installed capacity of Colombia’s energy system
The Inter-American Investment Corporation (IIC) signed two loan agreements, one in the amount of US$7,850,000 for Guanaquitas S.A. E.S.P. and the other in the amount of US$7,650,000 for Caruquia S.A. E.S.P. Both loans are for small, renewable energy hydropower projects.
These build-and-operate hydroelectric power plant projects will be carried out in the municipality of Santa Rosa de Osos, Department of Antioquia, in the Guadalupe River basin ninety-five kilometers from Medellín. The plants will have an installed capacity of approximately 9.8 MW each. Combined, they will generate 124.1 GWh of clean energy per year.
Technical assistance support from the Korea-IIC SME Development Trust Fund made it possible for the project to be implemented in line with design and detail engineering, thus increasing investor confidence.
Colombia’s numerous hydrological basins provide significant potential for power generation. However, increased demand resulting from rapid economic growth means that the nation still depends on environmentally damaging thermopower plants. The Caruquia and Guanaquitas plants naturally divert the flow of the Guadalupe River; such run-of-the river power plants do not require reservoirs and thus have minimal environmental impact. These two projects are an example of the use of clean, efficient technology in Latin America.
Colombia has extensive natural resources for generating renewable energy, but the local financial system does not offer financing on appropriate terms for this type of project. The current worldwide bank credit crisis has exacerbated these structural weaknesses. The IIC is thus playing a key role in this operation, helping demonstrate that it is viable for the private sector to invest in small hydropower projects and provide long-term financing for them.
"Both of these small, 9.8 MW hydropower plants—Caruquia and Guanaquitas—are very important for Colombia because they will generate clean, renewable energy with little environmental impact. In addition, because the construction phase will be relatively short they will quickly be able to meet some of the demand for energy in Colombia and thus help avoid the use of more polluting sources of energy. The financial leverage of sound institutions like the IIC is indispensable, both to help cover the cost of such projects and to ensure successful completion," according to Carlos Felipe Ramírez, president of HMV Ingenieros Ltda. and legal representative of both companies.
"Small, efficient plants that generate renewable energy and are operated by the private sector are indeed key to development in our region because megaprojects take longer to complete and require enormous financial resources that are difficult for the region’s private sector to obtain. These hydropower plants also help diversify sources of energy and thus further national growth," said Jorge Ciurlizza, IIC senior investment officer and member of the project team.
The Inter-American Investment Corporation is a multilateral financial institution that is a member of the Inter-American Development Bank (IDB) Group. It provides financing (in the form of equity investments, loans, guarantees, and other instruments) and advisory services to private enterprises in Latin America and the Caribbean. In 2007, the IIC reached US$1.2 billion in assets and approved 62 transactions channeling US$470 million to SMEs in the region. The IIC’s mission is to promote the economic development of its regional member countries by encouraging the establishment, expansion, and modernization of private enterprises, particularly those that are small and medium in size. For more information on the IIC’s activities, please visit www.iic.int.
Contact: Olga Lucía De Narváez
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