The Japan International Cooperation Agency (JICA) signed a loan agreement with ENERGUATE*, an electricity distribution company in the Republic of Guatemala, for up to US$75 million on May 9, and held a closing ceremony in Guatemala City on July 17. The proceeds of the loan will be used by the company to invest in the construction, maintenance, and renewal of power distribution network facilities in 20 provinces in rural Guatemala. This is the first overseas investment and loan project for Guatemala. The project will be co-financed with the International Finance Corporation (IFC), which has signed a loan agreement with ENERGUATE for up to US$100 million.
Guatemala’s national disparities are wide, with rural areas, affected by a civil war that lasted for more than 30 years, still lagging behind urban areas in terms of income levels and electricity grid connection rates. Half of the country’s total power supply already comes from renewable energy sources such as hydroelectricity, while wood stoves are still used for cooking and other purposes in rural, un-electrified areas. As a result, Guatemala’s wood consumption per unit of population as a source of energy is the largest in Central America, and has been cited as having adverse effects on health, greenhouse gas emissions, deforestation, and energy efficiency. The Guatemalan government estimates that 60-70% of households that use wood as a heat source for cooking lack proper ventilation, and 5-20% of the poorest households share a cooking area and bedroom.
This project aims to electrify rural Guatemala, promote the use of renewable energy sources as alternatives to wood and other resources, improve service quality in medium- and low-voltage networks, and reduce electricity losses through loans to ENERGUATE, a company that operates an electricity distribution business for 20 rural departments in 22 Guatemalan provinces where the electricity grid connection rate is less than 99%. The loan will contribute to SDG Goals 7 (sustainable energy), 10 (reducing inequality), 13 (combating climate change), and 17 (achieving the goals through partnerships). It also aligns with the Accelerating Climate Change Solutions Facility (ACCESS), which Prime Minister Kishida announced the establishment of at a side event on the G7 Global Infrastructure Investment Partnership in May 2023.
(Note) The registered corporate names are Distribuidora de Electricidad de Oriente S.A. and Distribuidora de Electricidad de Occidente S.A. In this report, “ENERGUATE” is used as the common name to refer to both companies collectively, which is widely used locally.
Closing Ceremony
© Source JICA
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