IDB Approves $1.14bn Credit Line to Argentina to Decarbonize its Energy Sector

(IDB, 27.Jul.2022) — The Inter-American Development Bank (IDB) approved a $1.14bn conditional line of credit for investment projects to decarbonize Argentina’s energy sector.

The IDB Group remains committed to supporting Argentina’s development agenda with projects that have a direct impact on development. As part of the credit line, the IDB authorized an initial $200mn in financing. This will be augmented by an additional €100mn from the French Development Agency and €100mn from the European Investment Bank.

The first operation aims to help decarbonize Argentina’s electric power industry by slashing its greenhouse gas emissions. It will also help expand and upgrading power transmission grids, offering tangible benefits to Argentine citizens.

Argentina will use these funds to upgrade transmission systems in different provinces. It will also prioritize projects that cut greenhouse gas emissions by expanding transmission capacity for renewable energy, reducing technical losses and decommissioning diesel-fired power plants.

These investments will bolster service quality and reliability to better meet rising demand and increase the electrification of energy consumption, driving greater productive development in Argentina’s provinces.

Each intervention is designed to include measures to ensure climate resilience and adaptation. The program will also allocate funds for reforestation with native species in areas to be defined with each province’s forestry authorities.

The initiative will also underpin work to develop a gender and diversity policy for the Federal Electric Transportation Trust Fund, as well as an action plan for transmission projects to boost female participation in the industry (which currently stands at under 20%) and mitigate gender-based violence at all stages of the project.

The program aligns with Vision 2025, the IDB’s blueprint for recovery and inclusive growth in Latin America and the Caribbean. This program focuses on three of Vision 2025’s five key pillars: digitalization, climate change, and gender and inclusion.

The $200mn IDB loan has a repayment term of 25 years, a grace period of five and a half years, and an interest rate based on the SOFR.