Upon completion, which is expected in 2016, the Hidroelectrica de Chaglla project will provide about 13% of the country’s installed hydropower capacity.

The $1.2bn plant is expected to prevent greenhouse gas emissions of about 467,000 metric tons of carbon dioxide equivalent annually.

The IDB loan will be granted to Empresa de Generacion Huallaga, a subsidiary of Odebrecht Energia, both of which are part of Brazil’s Odebrecht Group.

IDB Structured and Corporate Finance department project team leader Esteban Sarzosa said the hydro power plant advances the delivery of environmentally responsible and socially sound infrastructure by incorporating sustainable solutions such as biodiversity conservation.

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.