US$25 million contribution for financing San Gabán II

(Lima, January 17, 2000).– CAF contributed US$25 million to finance the San Gabán II project, which is 11.1% of the total investment of US$225 million. The loan is for ten years, including a grace period of 18 months.

CAF participation became possible after the US$155 million allocated by Eximbank of Japan, 57.7% of the finance, was reduced to US$130 million following devaluation of the yen during the disbursement period (1996-1998). As a result, on December 31, 1990, the Peruvian Ministry of Economy and Finance officially applied to CAF for a US$25 million loan, for the purpose of completing construction of the hydroelectric plant and guaranteeing its operation and integration into the interconnected system of the south by the end of 1999.

CAF agreed to participate in the Project because its completion is a necessary condition for Peru to achieve its goal of expanding the national electricity frontier to achieve 72% electricity coverage, including remote areas of the country, and make a frontal attack on one of the most aggravating factors of poverty, which is lack of electric power.

The project will also improve the composition of the generating plant of the South Interconnected System, specifically compensating for the breakdown of the Machu Picchu hydroelectric plant in February 1998. At international level, the project will facilitate connection with Brazil and Bolivia, by means of the interconnection of the network created with execution of the project to connect isolated localities, unifying the San Gabán II substation to the localities of Puerto Maldonado-Iberia-Iñapari (Madre de Dios) in Peru with Cobija in Bolivia and Brasilea in Brazil.

The borrower of the operation is the Republic of Peru, with the Ministry of Energy and Mines (MEM) acting as executing agency, through Empresa de Generación San Gabán SA, created especially by the Peruvian government in 1994 to execute and manage the project.