IDB Backs Program for Universal Access to Electricity in El Salvador

IDB release

The Inter-American Development Bank (IDB) approved a Conditional Credit Line for Investment Projects of up to $180 million and an initial $93 million individual loan under that credit line to help El Salvador make a just energy transition.

The operation also seeks to reach universal electricity coverage with a greater share of renewable energy.

The first individual operation will help universalize the electric power service by implementing sustainable electrification strategies that maximize the use of renewable energies. 

It aims to increase access to electricity, enhance the technical capacity of the Lempa River Hydroelectric Executive Commission to plan and manage electrification projects, and promote productive use of energy with a gender focus in beneficiary communities. 

El Salvador’s electrification rate has risen from 91.6% in 2010 to 98.2% in 2022, although there continues to be a disparity between the urban electrification rate of 99.3% and the rural electrification rate of 96.4%.

The loan, which was approved by the IDB's Board of Executive Directors, will move the country closer to the goals in its 2020–2050 National Energy Policy of universal access to electricity by 2030 and of guaranteeing permanent and equitable access. 

The program will therefore include infrastructure investments to expand the country's electricity service by extending the distribution network. It also plans to install photovoltaic mini-grids with energy storage systems and individual solar photovoltaic systems, as well as improve social and environmental management.

It will also bolster the institutional capacity of the Lempa River Hydroelectric Executive Commission and the Cuscatlán Electricity Distribution Company to plan, design and supervise electrification projects and incorporate a gender policy. 

Finally, the operation will foster productive development, awareness, and participation among communities. These steps will make the program more sustainable by engaging beneficiaries on a deeper level, cultivating a sense of ownership of the electrification projects, and promoting productive uses of electricity. 

The program’s direct beneficiaries will be the communities where the works will be built, where 8,759 users who currently have no access to electricity live. In addition, the Lempa River Hydroelectric Executive Commission and the Cuscatlán Electricity Distribution Company will benefit from institutional strengthening. 

The financing of up to $180 million under the Conditional Credit Line for Investment Projects will be available for 10 years. The first individual loan of up to $93 million approved under this facility has a 23.5-year repayment period, a 7-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).