WASHINGTON, D.C., January 11, 2000
– In an unprecedented measure to relieve the suffering caused by flooding and mudslides in Venezuela, the International Finance Corporation has approved an emergency loan to La Electricidad de Caracas to speed restoration of electricity to shantytowns and lower-income neighborhoods.
After three days of heavy rains in mid-December devastated the coastal area around Vargas, in what authorities called the worst natural disaster in Venezuela's modern history, IFC moved immediately to arrange an urgent loan of $30 million to a local power company, EDC. The Board of IFC today approved the loan by an accelerated process.
EDC will use the IFC investment exclusively to re-connect electricity in poor and middle income areas that would otherwise have been a lower priority for repairs. EDC will restore public lighting and electrical services to residences, small businesses, remote water and sewage pumping stations, schools, medical clinics, and public offices.
"Without street lighting, crime in these neighborhoods has soared," said IFC Executive Vice President Peter Woicke. "People are connecting homemade wiring to the electricity poles that carry power, posing enormous danger especially to children. And without power, there is a lack of refrigeration and fresh water needed to maintain public health in a tropical climate. There was an urgent need to get basic services hooked up."
Since IFC had recently worked with Electricidad de Caracas, the company was a known business partner and all due diligence had been done, expediting the approval of the emergency loan. Last June, the IFC Board approved a loan of $75 million to EDC to upgrade the quality and access to electricity in poor and middle class neighborhoods and increase efficiency of the distribution system. EDC has a strong environmental record and its activities conform to World Bank environmental and social standards.
EDC, which operates natural-gas-fired generating complexes and distributes electricity, plans to repay the emergency loan with funds it will eventually receive under its extensive insurance coverage.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC's main activity is financing private sector investments in the developing world.
Providing emergency financing for a humanitarian cause is not typically a role that IFC is well equipped to handle. But, in this case the conditions were right for us to be able to react, Mr. Woicke said, "and we very much hope that the help we bring to Venezuela at this troubled time will become an example of how we can work together with our local partners and our Board to respond with alacrity at times of real need."
