IFC Will Finance La Vegona Hydroelectric Project

The Financial
The International Finance Corporation (IFC), a member of the World Bank Group, and Oesterreichische Entwicklungsbank AG (OeEB) are providing US$98 million in financing for Compañía Hondureña de Energía Renovable S.A. (COHERSA), to construct the largest private hydropower project in Honduras, which will promote clean energy and help the country meet its growing power needs. IFC is supporting the construction of the 38.5-megawatt project with senior and subordinated loans totaling US$30 million. IFC has also mobilized US$68 million for the project, including a US$23 million parallel loan from OeEB, Austria’s development bank. The project, La Vegona, is IFC’s first renewable energy investment in Honduras. Beginning in mid-2013, the hydropower plant is expected to produce about 181 gigawatt hours of electricity a year, and will power thousands of households in the country.

La Vegona will also help to improve the competitiveness and sustainability of Honduran exporters by supplying lower-cost energy from a clean source. During the construction phase, the project is expected to employ about 500 local workers.

Adolfo Larach, President of COHERSA, the project’s developer, said: “La Vegona represents an important milestone for the development of renewable energy in Honduras. The project will make a significant contribution to help reduce Honduras’ dependence on imported oil, by providing a reliable source of low cost, clean energy.”

More than 60 percent of Honduras’ power is generated from fossil fuels, which are expensive and pollute the environment. To help address this challenge, IFC is working to support the government of Honduras’ strategy to develop its domestic renewable energy resources, including hydropower.

“Promoting renewable-energy projects is at the core of IFC’s climate change strategy in Latin America and the Caribbean,” said Bernie Sheahan, IFC’s Director for Infrastructure in Africa and Latin America and the Caribbean. “La Vegona will have a positive impact on the environment by offsetting carbon emissions of fossil-fuel power projects, while providing long-term renewable energy at affordable prices to Honduras.”

Andrea Hagmann, a member of OeEB executive board, said: “Sustainable energy is important for development and growth. Using renewable energy decreases the dependency on expensive fossil energy, a burden for the economies of developing countries.”

This financing is consistent with IFC’s strategy in Honduras to support private sector companies that have a strong development impact, particularly in strategic sectors such as infrastructure and renewable energy and helping local companies become regional and global players. (9/27/11)