UK-based power producer Rurelec has secured credit facility of $7.2m from Inter-American Investment Corporation (IIC) to finance the construction of Canchayllo hydroelectric project in Peru.

The 5.3MW run of river power plant on the Pachacayo River in the Junin Province is owned by Rurelec’s 70% owned Peruvian power generation company Cascade Hydro.

IIC is a member of Inter-American Development Bank (IDB).

Through its first Peruvian hydroelectric facility, Rurelec marks its foray into Latin American market. Canchayllo is part of the company’s plan to launch a hydro project portfolio comprising 40MW run of river plants in Peru through Cascade.

Commenting on the developments, Rurelec chief executive Peter Earl stated that the funds from IDB mark a significant step in company’s efforts to boost power generation capacity of Peru.

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

Rurelec, meanwhile, has finalized a Subasta Renewable Energy Resources (RER) power purchase agreement to sell the power at the rate of $47.4 per MWh, following its commissioning due in first quarter of 2014.