US$ 333 million approved for the Republic of Ecuador

The Corporación Andina de Fomento (CAF) has approved the granting of some US$ 333 million to the Republic of Ecuador, of which US$ 250 million will be for financing the Sectorial Program for Strengthening the Electricity Distribution System, and US$ 83 million will be for undertaking two road infrastructure and urban development projects, one in Cuenca (US$ 42 million) and the other in Quito (US$ 41 million), to be carried out by the Municipality of Cuenca (MC) and the Municipality of Quito Metropolitan District (MDMQ), the latter through Empresa Metropolitana de Obras Públicas de Quito (EMOP-Q).

Enrique García, CAF President & CEO, explained that this approval falls within the scope of measures being taken by the agency to promote a comprehensive development agenda for the region by furthering initiatives that foster overall stability, efficiency, and equity. “All this is in line with the CAF’s institutional objectives, which include promoting and financing sustainable public and private infrastructure programs and projects, production, and regional logistics.”

As for the financial support that CAF has granted Ecuador, it is worth noting that the agency has increased its portfolio of loans in Ecuador by 29%, bringing this country’s share of CAF’s total portfolio to 16% as at 2004.

Strengthening the Electricity Distribution System

CAF has approved a loan of US$ 250 million for financing the Sectorial Program for Strengthening Ecuador’s Electricity Distribution System, which aims to upgrade the electricity distribution system and undertake basic infrastructure projects. The agency in charge of carrying out the investments in the electricity sector will be the Ministry of Energy and Mines, and the Ministry of Economy and Finance will be responsible for undertaking the investments in basic infrastructure.

The total cost of the Program is US$ 357 million, of which CAF is financing US$ 250 million (70%) and local sources are to provide US$ 107 million (30%).

The purpose of the Program is to achieve the physical and financial recovery of electricity utilities in Ecuador by carrying out optimization projects that will make it possible to reduce technical losses associated with deficiencies in the companies’ facilities and the reduction of non-technical losses associated with shortcomings in the companies’ commercial system. Besides investment in projects, the Program includes support components in institutional management issues, campaigning to raise awareness among the population, and social and environmental aspects having to do with the electricity sector. In addition, the loan will finance the execution of basic infrastructure projects aimed at improving other public services.

CAF’s first contribution to Cuenca

US$ 42 million is the amount of CAF’s first loan to the city of Cuenca. These funds will be used to finance Cuenca Municipality’s Road and Urban Development Program, in support of the “Neighborhood for Better Living” project, which aims to optimize socioeconomic conditions in the city by improving the quality of the environment and town planning, the urban and rural road systems, and accessibility to community, cultural, educational, health, and social sectors, all of which has a highly favorable impact on public transport and road infrastructure, so benefiting inhabitants within the area of influence of the road projects and improving their quality of life.

The total cost of this credit operation comes to US$ 62.6 million, which will be financed with the CAF loan for US$ 42 million (67%) and by own resources of US$ 20.6 (33%).

Execution of this project will also mean improvements in Cuenca Municipality’s administrative, operational, and financial performance so that it can guarantee the provision of the urban road improvement services on a sustainable basis, as well as foster the active participation of the inhabitants in determining priorities and solutions to development problems in their sectors.

The city of Cuenca, which has been declared to be part of the Cultural Heritage of Mankind by UNESCO, will be receiving this financial support as it is approaching its 450th anniversary, in 2007.

Second Road Program for Quito Municipality

CAF has approved US$ 41 million for financing the Second Road Program for Quito Municipality, which consists of executing supplementary works for the proper functioning of Quito’s Transport Corridors, a Program for providing Access to Impoverished Urban Areas (253 in all), and the conducting of technical studies for two Urban Expressways.

The total cost of the project financed by this credit operation comes to US$ 61 million. CAF’s loan for US$ 41 million will cover 67%, and own resources amounting to US$ 20 million will cover the difference (33%).

The purpose of this Program is to provide a route that will link up the north and south ends of the city, making it possible for inter-regional traffic to pass directly through, thereby optimizing the connectivity of the urban transportation system. At the same time, the Program seeks to streamline urban public transport in line with development plans that have already been approved for the city.