Paraguay/WB: US$100 Million to Improve Energy Supply

November 30, 2010

WASHINGTON, November 30, 2010 - The World Bank (WB) Board of Executive Directors approved a US$100 million Paraguay Energy Sector Strengthening Project today, seeking to increase the quantity and quality of the national electricity supply while improving the performance of the National Electricity Administration (ANDE, in Spanish).

The project will seek to satisfy Paraguay’s growing demand for electricity, directly benefitting households, companies and local industries by improving transmission and distribution networks at the same time it increases the volume of energy available for commercial or productive uses.

The project will also contribute to the reduction of service interruptions and associated losses. 

“This project will contribute to the expansion of the electricity grid, strengthening the country’s energy sector, expanding the foundations needed to promote the establishment of more industries, putting Paraguay in a better position to promote and sustain its growth and development paths,” said Finance Minister Dionisio Borda.

In fact, Paraguay is one of the South American countries whose economic growth will be close to 10 percent in 2010, putting it above the regional average.

The electricity sector plays a key role in Paraguay’s economy, as it benefits from one of the greatest hydroelectric resources in the world, the Parana River on the country’s southeast border, providing an abundant supply of water to operate three large hydroelectric reservoirs: Itaipu, Yacyreta and Acaray.

“Access to clean and low-cost hydroelectric energy will allow us to make progress in adding value to our products and achieving greater industrial development, which will bring about economic benefits and improve the country’s competitiveness,” said Penelope Brook, World Bank Director for Argentina, Paraguay and Uruguay.

The project is composed of three components:

  • Updating ANDE’s distribution management system and setting up an advanced measuring system for great consumers.
  • Improving the performance of the transmission network.
  • Strengthening the national energy sector and ANDE’s institutional capacities.

Some of the expected results include: 

  • Increasing the quality of the electricity supplied to consumers by strengthening the electricity transformation capacity.
  • Increasing service reliability by reducing energy supply interruptions and improvements in average voltage drops.
  • Reducing distribution losses through the implementation of an advanced management and control system.

The Project supports the achievement of part of the objectives set out in the Short and Medium Term Generation, Transmission and Distribution Master Plan (2009-2010) created by ANDE, which identifies infrastructure investments needed to improve the efficiency of the national electricity sector.

“We are working to reinforce the National Interconnection System to adequately satisfy our client’s demands,” said German Fatecha, President of ANDE, adding that “because of this we appreciate the World Bank’s support for this effort to undertake several construction expansion works foreseen by the Master Plan, which will serve to improve the quality of our electricity supply system.” 

Although the country generates and exports electricity, internal per capita consumption is still low (1,000 kWh/year, around one third of Brazil’s and Chile’s consumption levels). ANDE estimates that the demand for electricity will rise some 9% annually in the medium term, boosted mainly by increases in residential and commercial demand.

This US$100 million fixed-interest rate loan from the International Bank for Reconstruction and Development (IBRD) has a 27-year maturity period and an 8-year grace period.

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