The Inter-American Development (IDB) has approved a $20m loan to finance a rural electrification program in Panama.

The program will promote public and private investment to provide service for over 10,000 rural households, located mostly in remote areas, which would increase Panama’s electricity coverage rate to approximately 81% of Panama’s rural households by 2018.

In addition, the program will offer incentives for grid-extension and off-grid systems, as well as improving the Panamanian government’s institutional capacity for the formulation, execution, oversight and evaluation of rural electrification projects.

The project includes a system of subsidies for new investments in rural electrification through either grid extension or renewable energy projects in rural areas. The eligible renewable projects include small hydroelectric projects, wind power plants, and solar photovoltaic systems.

Panamanian government’s efforts to increase national electricity coverage levels were supported by the IDB through rural electrification program since 2006.