UK-based electricity utility Rurelec has secured financial closure of around $7.2m for its Canchayllo hydroelectric project in Peru.

Inter-American Investment Corporation, a member of the Inter-American Development Bank, has provided the funding for the project that is owned by Cascade Hydro.

The project is a 5.3MW run of river power plant being built on the Pachacayo River in the Junin Province of Central Peru.

Additionally, the Canchayllo hydroelectric has secured a Subasta Renewable Energy Resources power purchase agreement to sell the power at $47.4 per MWh.

Construction works on the project are in the final stages and the plant is expected to become operational in the first quarter of 2014.

Rurelec chief executive Peter Earl said financing from the Inter-American Development Bank will enable the company to increase its power generation capacity in Latin America.

"We are now developing 295MW in Chile as well as 40MW in Peru where 5.3MW is already under construction, and it is our intention to continue to increase capacity, subject to financing," Earl added.