Inter-American bank loan to Panama program includes small hydro

The Inter-American Development Bank (IADB) has approved a US$30 million loan to Panama to finance a rural electrification program that could include small hydropower projects.

IADB said October 12 that the program would promote public and private investment to serve 30,000 rural households, increasing rural electricity coverage by 10 percent.

The program includes a system of subsidies for new investments that are to motivate private enterprises to invest in rural electrification, either through grid extension or renewable energy projects in isolated areas. Among eligible renewable energy projects are small hydroelectric, wind, and solar facilities, IADB said.

�The final designs and construction of the projects will be the responsibility of the distributors or renewable energy system operators, which will also be responsible for maintaining the facilities,� IADB team leader Arnaldo Vieira de Carvalho said.

The program also will be used for institutional strengthening and capacity building, as well as financing studies on the use of carbon credit sales as a new source of funding.

The program is to be implemented by the Rural Electrification Office of Panama’s Ministry of Presidential Affairs.

Support for program preparation was provided through a technical cooperation grant from the Japan Special Fund Poverty Reduction Program. The loan has an amortization period of 25 years, with a five-year grace period and an adjustable interest rate.

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