Contacts:In Washington: Alejandra Viveros, (202) 473 - 4306 Aviveros@worldbank.org In Lima: Sandra Arzubiaga, (511) 615-0660 WASHINGTON, March 7, 2006 – The World Bank’s Board of Directors today approved a $50 million loan for Peru, as well as a $10 million grant from the Global Environment Facility (GEF), to increase access to efficient and sustainable electricity services in rural areas. “Investing in the provision of basic infrastructure is key to improve the quality of life and productivity of all Peruvians, and reduce the incidence of poverty in rural areas,” said Marcelo Giugale, World Bank Director for Bolivia, Ecuador, Peru and Venezuela. The Rural Electrification Project aims to provide electricity service to rural households and businesses that do not have access to modern energy services, as well as introduce an approach to rural electrification that would result in more efficient provision of rural electricity services. The project will be implemented by the Ministry of Energy and Mines. More than six million people in the predominantly poor rural areas of Peru do not have access to electricity. At about 30% coverage, this is one of the lowest rural electrification rates in Latin America. Together with scarcity of other infrastructure services, lack of electricity results in high costs for basic energy services, a lower quality of life, poor medical care and education, and limited opportunities for economic development. Specifically, the project will support the following activities: - Provide targeted subsidies to public and private electricity service providers investing in rural electrification sub-projects that use either conventional or renewable sources of electricity. These sub-projects will provide service to about 160,000 newly connected rural households, businesses, health centers, schools and community centers, benefiting about 800,000 people.
- Provide technical assistance to support the implementation of the proposed rural electrification approach. This includes sub-components to improve the regulatory environment, build capacity of project participants, promote private sector investment, and promote renewable energy.
- Finance a pilot program to promote productive uses of electricity. This will contribute to increase the productivity of rural businesses by targeting enterprises that currently use diesel power, as well as other energy intensive farm and off-farm enterprises, but which could benefit from use of electricity.
- Establish a Small Hydro Generation Financing Facility to provide project financing during the construction and initial operation period for grid-connected, small hydro generating plants that would sell power to the interconnected grid.
“The project will increase access to electricity and provide more efficient and sustainable rural electricity services,” said Susan V. Bogach, World Bank task manager for the project. “As a result, the capabilities of regional and local governments to identify, plan and realize rural electrification projects will also be increased,” added Demetrios Papathanasiou, co-task manager of the operation.
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