The Inter-American Development Bank (IDB) has agreed to provide multiple-works investment loan of $276.05m to Centrais Eletricas de Santa Catarina–Distribuicao S.A. (CELESC-D), the electric power distribution utility serving Brazil’s state of Santa Catarina.

 The program’s overall objective is to help boost productivity throughout the state of Santa Catarina by providing a higher quality and more reliable supply of electric power.

The program’s implementation is expected to increase CELESC-D’s capacity to meet projected demand by 2022, which is estimated to be 28,270 Gigawatt hours. The program will benefit 2.8 million consumers in CELESC-D’s concession area of 6.5 million people, by enabling the company to meet future demand for electricity with better quality service indicators.

Beneficiaries will include the industrial sector, which accounts for 41 percent of CELESC-D’s demand. The state of Santa Catarina will experience fewer power outages, which should boost its productivity. The program will also make it possible to incorporate new clients in the concession area, while improving service continuity indicators up to the regulatory limits established in its concession contract.

The program represents 60 percent of CELESC-D’s planned investments over the next five years. The installation of new distribution lines, substations, and feeder lines is essential to meet the increase in electricity demand in Santa Catarina. This new infrastructure will help reduce the frequency and duration of outages by providing additional supply routes in the event of outages, thereby increasing service reliability.

The loan also will support the expansion and improvement of the distribution network by installing new lines, substations, equipment, and feeder lines, expanding the low voltage network, replacing and installing new meters to satisfy growth in demand, and improving quality indicators. The program also provides for improvements to CELESC-D information management systems. The development of a gender promotion strategy – to include updating the Young Apprentice program – is expected to improve the company’s management activities over the long term.

The US$276,051,000 investment loan is for a 25-year term, including a 5.5-year grace period, at a LIBOR-based interest rate, and is funded through the IDB’s Ordinary Capital. The borrower’s financial obligations will be secured with the sovereign guarantee of the Federative Republic of Brazil, as well as the guarantee of the State of Santa Catarina on the borrower’s performance obligations, which include the obligation to provide local counterpart resources. The program provides that CELESC-D will provide a counterpart contribution of US$101,230,000.