Loan approved for Brazil for electricity interconnection with Venezuela

A long-term loan for US$86 million was today approved for the Republic of Brazil to finance a program for the electricity interconnection – at 230 Kv – between the border localities of Santa Elena de Uairén (Venezuela) and Boa Vista (Brazil), which is part of the Energy Integration Project which the two countries are implementing.

This is the third long-term loan that CAF has approved for Brazil since November 1995, when the country became a CAF shareholder, joining another ten nations of Latin America and the Caribbean. The total amount approved – including this operation – is US$477 million, destined to finance BR-174 Highway, also on the Brazilian-Venezuelan border (US$86 million) and the Bolivian-Brazilian integration gas pipeline (US$215 million).

CAF President & CEO Enrique García – of Bolivian nationality – said the objectives of the Venezuelan-Brazilian energy interconnection project included interconnection of the electricity networks of the two countries, and provision in the short-term of an adequate and reliable power supply to Roraima state which lays the base for future expansion.

He added that the project would stimulate continental energy integration, one of the priority fields of action of the institution he heads because it combines the two pillars of its institutional mission: the sustainable development of its shareholder countries and regional integration.

"The loan operation represents effective backing by the Corporation for the energy integration agreement between the two countries, signed by President Rafael Caldera of Venezuela and President Fernando Henrique Cardoso of Brazil last April in Boa Vista," he added.

Details of the project The loan will be granted in two tranches: first, US$55 million, with a ten year term and three years of grace. The borrower in this case is Centrais Elétricas Brasileiras, SA (Eletrobras), partly state-owned company whose main shareholder is the federal government. The executing body of the project is Eletronorte, subsidiary of Eletrobras. The funds will be used for installation and assembly of a 211 km section of the 230 Kv electricity transmission system between Santa Elena de Uairén and Boa Vista.

The borrower of the second tranche for US$31 million, also at ten years with three years of grace, is the State of Roraima, which is the main shareholder of the executing body: Roraima Electric Company (CER).

This portion of the loan will be used to build seven substations and subtransmission lines at 69 Kv, which will carry power to the localities of Novo Paraiso, Caracai, Alto Alegre, Taiano, Vila Brasil, Canta, Bonfim, Normandia and Mucajai.

CAF also carried out a careful evaluation of the environmental and social variables – as in all the projects that its finances – which coincides with the concerns of the Brazilian government. As a result, the Brazilian authorities are allocating at least 1.5% of the total cost of any project to financing activities aimed at preventing, compensating or mitigating environmental impacts.

In the specific case of the Energy Integration Project, the transmission line will be routed parallel to the BR-174 highway which reduces the environmental impact to a minimum. A Recuperation Program will be implemented in the affected areas, consisting of preventative and compensatory measures to mitigate any impact during construction phase.

In addition, in compliance with legal provisions, the indigenous communities were consulted, and a series of activities are planned to recover degraded areas, preserve archaeological heritage, and prepare a landscaping program to reduce the visual effects of the line, among others.