CAF approves US$2.23 billion for Latin America

(Caracas, August 18, 2009).- CAF today approved operations totaling US$2.23 billion in favor of Argentina, Colombia, Ecuador, Peru, Uruguay, and Venezuela, and announced the launch of the Special Financing Program for Clean Energy Projects (Propel).

CAF President & CEO Enrique García explained, "the approvals address the priorities set by the shareholder countries in the areas of social development, decentralization infrastructure and environment." "It is a reflection of the opportune and effective support that the Corporation offers to Latin America, as part of its anti-cyclical activity to help the region confront the impact of the international economic crisis," García added.

"All the approvals benefit Latin American citizens - said the president of the multilateral financial organization - especially projects targeted at low-income and more vulnerable populations, and also improve competitiveness, in line with the development proposal promoted by CAF, based on a model of high sustained quality growth with greater equity and social inclusion."

In the specific case of Peru, CAF approved US$600 million for two operations: US$300 million to start-up the Lima Urban Electric Train; and a contingent financing facility of US$300 million for integrated response to emergencies caused by natural phenomena. The former will be executed by the Ministry of Transport and Communications (MTC) through the Lima and Callao Special Mass Transport Project Autonomous Authority (AATE); and the latter by the Ministry of Economy and Finance (MEF).

Venezuela benefited with approval of US$600 million to finance the Thermozulia III Thermoelectric Project to be executed by C.A. Energía Eléctrica de Venezuela (Enelven), subsidiary of the National Electricity Corporation - Corpoelec. The objective is to finance a new combined-cycle thermal power plant which will increase the reliability and autonomy of the Western Region Electricity System and meet growing demand for the service in the area.

CAF also approved a US$400 million loan in favor of the Republic of Colombia to contribute to the national government's efforts to deepen the decentralization process. The executing agency will be the Ministry of Finance and Public Credit.

For Argentina, CAF approved US$275 million to contribute to the financing of the Greater Buenos Aires potable water and sewage system. The objective is to improve access to these services by the low-income population of the capital city and 17 municipalities of Buenos Aires province. The executing agency will be Agua y Saneamientos Argentinos (AySA).

In the case of Ecuador a loan for US$250 million was approved to support execution of a set of priority public investments in the electricity sector to improve, expand and optimize generation, transmission and distribution infrastructure in the sector. The executing agency is the Ministry of Finance.

Finally, for Uruguay, US$100 million was approved in favor of the National Development Corporation (CND), with guarantee from the Republic of Uruguay to finance the Road Infrastructure Public Investment Program which the national government is executing. The executing agency will be the Uruguay Road Corporation (CDU), subsidiary of CND.

New financing mechanism for clean energy projects

Additionally as a contribution to mitigating the effects of climate change, the creation was announced of the Special Financing Program for Clean Energy Projects (Propel) which will promote execution of small- and medium-scale projects in the clean, alternative and efficient energy sector in Latin America.

"In the Corporation we have assumed an important commitment to the environment by generating specific strategies and implementing programs and initiatives through development of innovative financing schemes, which increase investment in the sector in the countries of the region," Garcia said.

Propel aims to solve the difficulties of access to long-term financing faced by small- and medium-scale energy projects, namely, shortage of funds for this type of operation, and the level of sophistication and high costs of their financial structuring.