Venezuela to improve its electricity service with a $200 million IDB loan
The funds will help the government-run power company CORPOELEC streamline its operations and implement a new technology platform
The Inter-American Development Bank today approved a $200 million loan to help the Bolivarian Republic of Venezuela improve electricity services by boosting the efficiency of the Corporación Eléctrica Nacional (CORPOELEC) power utility.
The funds will help the government's newly formed company develop its technical, socio-environmental, institutional, and administrative operations.
With 95 percent of its population receiving electricity services, Venezuela is among the countries with the highest energy coverage rates in Latin America. Almost three-quarters of its electricity is generated using clean, renewable resources.
Yet, the power sector has room for improvements, with energy losses approaching high levels and low collection rates by international standards. CORPOELEC is looking to improve its regulatory framework, structural generation, transmission, distribution, and commercialization.
In order to tackle these challenges, CORPOELEC has undertaken a strategy to absorb all public power companies and assume generation, transmission, distribution, and commercialization responsibilities.
With help from the Bank's funds, the company will:
- design a strategy plan for the power sector, including an economic sustainability model;
- raise its environmental profile by ensuring full compliance with regulations and designing contingency remediation plans;
- develop a single business management model for all subsidiaries and headquarters;
- implement a procedural and organizational model for generation, transmission, distribution, and marketing;
- install a new technology platform, including two data processing centers and systems for voice, data, supervision, monitoring, and automation services, over a three-year period.
- develop a financial projections system bringing all separate models into a single, centralized platform, and determine the valuation of the company's fixed assets.
Expected results include publication of financial statements, annual reports, and management reports audited externally according to international practices; raising the payment collection rate, and cutting billing processing time.
The loan is for a 20-year term with a five-year grace period and carries a LIBOR-based variable interest rate. The Venezuelan government will provide an additional $50 million in local counterpart funds.