MuniGuate URP

pending

The proposed investment involves an unfunded risk participation (URP) of 75% for a loan (the Covered Loan) to the Municipality of Guatemala City (MGC) with a maturity date before January 14, 2028, and up to GTQ [280] million (approx. US$ [35] million equivalent). The Covered Loan will be granted by one or several Guatemalan financial institutions. The proposed investment follows IFC’s upstream engagement under the LAC Cities Platform that started in October 2022. It will address the city’s infrastructure bottlenecks by funding capital expenditures in (1) water infrastructure, such as small greenfield water treatment plants (“WTP”, to be used as pretreatment to existing facilities), as well as the rehabilitation and expansion of an existing WTP and a groundwater extraction system managed by the municipal water company EMPAGUA to optimize the use of surface water and reducing losses of the groundwater system; (2) modernizing the city’s traffic light system through the installation of smart traffic lights and associated software and infrastructure upgrades to the existing control center, managed by the MGC’s Regulatory Entity for Transportation and Traffic - EMETRA and (3) assessing the feasibility of installing urban cycling routes and the deployment of a public bicycle system, managed by the Department of Urban Mobility, Planning Management of the MGC (together, the Project). The use of IFC proceeds will focus on projects with limited-to-medium environmental and social (E&S) risk that can be implemented within 2 years of commitment.  EMPAGUA’s infrastructure will receive approximately 85% of IFC’s proceeds, to build three pretreatment facilities to enhance the surface water quality at the inlet of existing WTPs, rehabilitate one WTP currently out of order, and refurbish a groundwater extraction facility to improve energy efficiency and control water losses due to leakages or seepage. These assets aim at optimizing the use of surface water and reducing losses of the groundwater system. In parallel, IFC will support MGC with a new advisory package under the LAC Cities Platform.