Equatorial Alagoas

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The proposed IFC investment consists of two loans of up to, in aggregate, US$250 million (i) the first of which to Equatorial Alagoas Distribuidora de Energia S.A. (“Alagoas”, “EAL” or the “Company”), a subsidiary of Equatorial Energia S.A. (“Equatorial Energia” or the “Group”), of an amount of up to BRL 500 million (approximately US$100 million) for IFC’s own account, and (ii) the second of which to another subsidiary of Equatorial Energia with a tranche of up to US$75 million for IFC’s own account and a tranche of up to US$75 million for the account of participants (the “Project”).The first loan consists of an 8-year senior green A Loan to Alagoas for financing a portion of the Company’s capex program for 2023 to 2024, including its programs for loss reduction, service quality improvement, and capacity expansion (the “Alagoas Loan”).The proposed second loan is a potential up to 8-year corporate facility of up to US$150 million to another subsidiary of Equatorial Energia, with use of proceeds to be aligned with those of the first loan. This ESRS and associated Environmental and Social Action Plan (ESAP) have been developed for the subsidiary EAL and a defined Use of Proceeds up to BRL500 million. IFC is planning to do similar investments with other subsidiary of Equatorial Energia for additional up to US$150 million, which will follow the same limited risk criteria for funding only Category B projects. Once the use of proceeds is defined, any investment in this subsidiary will be object of specific due diligence and appraisal, including development of their respective ESRS and ESAP.  Alagoas Loan The Company holds power distribution concession until 2049 to serve over one hundred municipalities in the State of Alagoas, in the northeast of Brazil. IFC proceeds will include the acquisition of new transformers, measuring equipment, replacement of obsolescent equipment at substations and existing distribution lines. The Alagoas Loan does not include any new transmission line, distribution lines or works covering connection of new users.  New footprint is associated to the construction of four new substations located within modified rural habitat or in urban areas, far from Indigenous lands or biodiversity sensitive areas. EAL is a steady operation with BRL2 billion of annual revenues. The Company is controlled by Equatorial Energia S.A., a former IFC client and the holding of one of Brazil’s largest utility groups.