Energuate UCL

active

DEOCSA and DEORSA are two power distribution companies in Guatemala, collectively referred to as Energuate (‘company’). Energuate is the largest privately-owned power distribution company in Central America based on the network’s geographic coverage and size. Operations consist of installing low and medium voltage distribution lines from nodal electrical substations on public rights of way (RoW) to rural households located within the regulatory threshold of their distribution area, provided these meet RoW access (obtained by the end-user from the local municipality) and technical safety requirements. Energuate presently serves 2.3 million mostly rural customers. The distribution sector was owned and operated by the GoG until 1996 when it was privatized. After several private owners, Energuate was acquired by Inkia Energy Group (https://inkiaenergy.com/en/) in 2016, granting them rights to operate, extend and maintain distribution services in 20 of 22 Guatemalan departments for a period of 50-years (ending in 2048). Inkia Energy is an existing IFC client (#42316), which owns and operates several power assets (generation, transmission and distribution) across Latin America and the Caribbean. IFC’s supervision of Inkia Energy’s performance is rated satisfactory. From an operational perspective, Energuate’s mandate is to support the Government of Guatemala’s (GoG) implementation of the Rural Electrification Program (REP), focused on last-mile electrification of communities living under conditions of extreme poverty and social and economic exclusion. These activities do not require (prior) intervention from the Government, and exclude all transmission activities, which are managed by other state and private entities. The proposed investment entails a 10-year senior unsecured loan to Energuate for up to US$ $175 million (including up to US$100 million from IFC). The proceeds of the loans provided by IFC shall be used for financing of the Co-Borrowers’ investment plan for the period June 30, 2022 through December 31, 2025 related to (A) energy loss control and reduction initiatives, and improvements to the existing distribution network to increase the efficiency and reliability thereof, and (B) enabling new distribution lines that will be built by the Co-Borrowers in the future to interconnect mostly users in rural communities located within the established distances of the network per regulatory requirements and per Energuate’s rural electrification plan (aimed to support the GoG’s REP), that will increase the reliability, efficiency, and resilience of the existing network, increase the number of household connections from the existing lines. Proceeds shall not be used for any investment-related activities within Alliance for Zero Extinction (AZE) and UNESCO World Heritage biodiversity sites (either natural sites or combined natural/cultural sites).