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IDB backs renewable energy in Caribbean and Latin America

The Inter-American Development Bank (IDB) has provided $2.6 billion in loans to finance key private sector infrastructure and natural resource projects in Latin America and the Caribbean over the past four years and it has mobilized another $2.8 billion in financing for the region through its syndication program.

Since the global financial crisis, the IDB has played a key counter-cyclical role in the region. The loans provided by the IDB have allowed countries and companies to proceed with their investments in large infrastructure and natural resource projects at a time when global liquidity was limited. The Bank’s participation in such projects not only helped catalyze investment from other financial institutions but it has also ensured that these projects were designed and implemented to achieve the best development outcome, both socially and environmentally.

The IDB, working with other development agencies, has been instrumental for the Dominican Republic to carry out a 123-kilometer toll road construction project linking the capital Santo Domingo with the country’s key tourist destination, the Samaná Peninsula. The project will cut travel time between the two regions by more than half and improve the supply of goods and services to the tourism industry.

The IDB provided a loan of $44.8 million while the European Investment Bank, the Corporación Andina de Fomento and Proparco, the French Government’s agency for economic cooperation and promotion (Proparco) provided another $102.4 million for the project.

The financing provided by the IDB and its partners covered more than 80 percent of the project cost. The IDB loan, approved in September 2009, was the Bank’s first loan to a private sector infrastructure project in the Dominican Republic.

Renewable Energy

The Bank is also supporting innovative renewable energy projects in the region through its non-sovereign financing. As lead arranger, the IDB provided $45 million of its own resources to finance the construction of the Eurus Wind Project, a 250 MW wind farm in Mexico. The Bank also structured a $30 million loan from the Clean Technology Fund of the Climate Investment Funds (CIF), marking the first use of CIF resources in the region. Moreover, the Bank and the International Finance Corporation (IFC) mobilized another $259 million for the project from a group of eight development finance institutions and commercial banks.

Eurus is the second largest project in terms of emission reductions under the clean development mechanisms established by the United Nations. The project is one of the cornerstones of Mexico’s strategy to diversify its energy matrix while reducing greenhouse gas emissions by half by 2050. The IDB has also helped ensure that environmental and social issues were properly addressed in the project and supported the implementation of a consultation and land leasing process with the local community to ensure they could voice any concerns and that issues were addressed.

 

Source: Caribbean News Now



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