The Inter-American Development Bank (IDB) approved the fourth and final transaction of a programmatic policy-based loan (PBL) designed to help Peru develop a sustainable energy matrix. This last transaction of $30 million completes the $230 million program that since 2009 has helped to increase the relevance of renewables and efficiency; to establish new inter-institutional mechanisms and to promote citizen’s participation.

This fourth operation supports the completion of a new sustainable energy matrix (Numes) 2011-2040, published by the Government of Peru; the design of a National Energy Plan and Indicative Sector Plans; the inclusion of Environmental Strategic Assessments in national and sector plans; the assessment of the Peruvian institutional and regulatory framework to promote hydro energy and non-conventional renewable energy sources; as well as specific policy measures to improve energy efficiency, emissions control, and environmental and social management.

Additionally, the program is promoting inclusive participation, social management mechanisms and boosting institutional capacity at the national, regional and local level through training, citizen participation guides and other means. The Program also supports the Government’s efforts to apply best practices in the management of revenues derived from the energy sector.

“The program has been successful in contributing to a more systemic approach to the challenges of the energy sector. Additionally, it has given the Bank a successful model to guide other countries of the region in developing similar projects, including valuable lessons in terms of the importance of dedicating human and material resources to long-term issues,” said Alejandro Melandri and Carlos Echevarría, the IDB´s project team leaders.

The program will benefit the Peruvian population at large through its contribution to boosting the economy, ensuring optimal use of natural gas and electricity resources and promoting diversification. This will help create a stable and predictable business atmosphere that can attract investments and promote growth while taking into account social and nature-preservation concerns.

PBLs are flexible instruments whose funds may be disbursed rapidly to provide support for institutional changes and policies through an agreed-upon reform program.

In 2009, 2010 and 2011, the IDB approved the first three loans in the program.

The IDB loan is granted for an 8-year term, with a 5-year grace period and an interest rate based on LIBOR.