The 406MW Chaglla hydroelectric plant is being built on the Huallaga river in the Chaglla and Chinchao districts of the department of the Huánuco. Once complete in 2016, it will represent about 13% of the country’s installed hydropower capacity.

“This project will make a significant contribution to Peru’s economic development,” said Esteban Sarzosa, the project team leader at the IDB’s Structured and Corporate Finance department. “It advances the delivery of environmentally responsible and socially sound infrastructure by incorporating sustainable solutions such as biodiversity conservation, local employment and capacity building”.

The IDB loan will be granted to Empresa de Generación Huallaga SA, a subsidiary of Odebrecht Energia SA, both of which are part of Brazil’s Odebrecht Group. Drawing from its successful experience in Brazil, Odebrecht will implement an innovative professional training program, known as “Creer Peru”, for local communities in areas related to civil construction.

The training program aims to give employment priority to local communities that lack qualified labor. It is designed to offer qualification programs for the Peruvian workforce in technical areas related to civil construction including carpenters, electricians, masons, welders, etc. Once certified, many of the participants are hired for Odebrecht construction projects. The skills they acquire are universal and can be helpful in seeking employment opportunities long after the construction phase of any particular project is complete.

The IDB loan will also help finance the construction of related infrastructure, including the transmission line linking the plant to the national electricity grid, access roads and other ancillary facilities.

The total cost of the project is $1.2B. The IDB loan (A loan) is expected to be coupled with a syndicated B Loan from international commercial banks for a total IDB A/B loan of approximately $400M. Additionally, it is expected that Banco Nacional de Desenvolvimento Econômico e Social (BNDES) will be participating in the long-term debt package with a parallel loan of $323M.