Philippines: World Bank Approves Two Projects To Expand Electricity Access For Poor, Remote Households

May 12, 2016

New assistance to boost investments in renewable energy

WASHINGTON DC, May 12, 2016 – The World Bank has approved two projects to boost investments in renewable energy in the Philippines and help bring electricity to millions of poor families in far-flung areas of the country.

The World Bank’s Board of Executive Directors today approved a US$44 million guarantee under the Philippines Renewable Energy Project (PhRED) to help reduce risks of commercial lending to electric cooperatives. This guarantee will enable these cooperatives to expand their electricity network, invest in renewable energy like small hydroelectric and solar power plants, and expand electricity access for poor households.

Separately, on April 28, World Bank Vice President Victoria Kwakwa approved a US$23 million grant for the Access to Sustainable Energy Project (ASEP). This grant is designed to help bring solar power to remote communities and islands not connected to the electricity grid managed by electric cooperatives.

World Bank Country Director for the Philippines Mara K. Warwick said the two projects can boost the country’s energy sector, strengthen economic growth, and help reduce emissions of greenhouse gases that contribute to climate change.

Having electricity in the remote areas of the country means that children will be able to study their lessons at night and their parents can also have more opportunities to earn money from entrepreneurial activities,” Warwick said. “Initiatives like these can help address poverty and promote shared prosperity.”

The projects can help the government achieve its long-term goals of full electrification by the 2020s and a tripling of renewable energy installed capacity by 2030, as part of the country’s sustainable development agenda, said Department of Energy Secretary Zenaida Y. Monsada.

“Electric cooperatives, serving over half the Philippine population, will play a big role in the government’s push to reach full electrification,” said Secretary Monsada. “The Government provides electrification grants to the electric cooperatives, but these cover only a portion of overall investment needs. Commercial loans are essential for strengthening electricity distribution networks, and banks look to the guarantee provided by PhRED to help manage their risks in providing significant funding amounts to the sector.”

“ASEP complements grid electrification by investing in solar home systems,” Monsada added. ”This will allow electric cooperatives meet their electrification targets in a more viable fashion by enabling them to avoid uneconomic line extensions while still providing electricity to remote, poor households.”

The Philippines Renewable Energy Project will provide more financial resources to an existing financial guarantee program of the government – the Electric Cooperative Partial Credit Guarantee program. Implemented by the Local Government Unit (LGU) Finance Corporation, the program has been providing credit guarantees since 2004 to commercial banks in the Philippines that extend loans to electric cooperatives.

PhRED is funded by the Clean Technology Fund under the Climate Investments Funds administered by the World Bank. These provide resources for promoting low carbon technologies to help mitigate climate change.

ASEP is funded by the European Union, as a portion of their total support to the Department of Energy amounting to Euro 60 million. The Global Partnership for Output-Based Aid, a partnership that funds initiatives for improving the delivery of basic services to the poor in developing countries, is also contributing US$3 million, specifically for the solar home systems component of the project.

Both PhRED and ASEP will be implemented by LGU Guarantee Corporation, a private entity owned by the Bankers’ Association of the Philippines and the Development Bank of the Philippines.

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