São Paulo, Brazil, July 11, 2022—A new investment will help expand and strengthen the electricity grid in the state of Bahia, one of Brazil's most vulnerable regions. IFC's green and sustainability-linked loan of BRL 550 million (approximately $115 million) to Neoenergia Coelba aims to improve the quality and reliability of power supply, boosting the resilience of Brazil's energy sector.
IFC's funding is the first "super green" loan—combining traditional "green" use-of-proceeds with sustainability-linked financing features—for a power distribution company in Latin America. It is also the first sustainability-linked loan in the Brazilian power sector. The investment will support Coelba, a subsidiary of Neoenergia—a publicly-traded energy company in Brazil—upgrade, expand, and digitalize its distribution network, as the company expects to add around 140,000 users annually over the next five years.
Brazil's core infrastructure investment need is estimated at $1.5 trillion for 2016-2030. Of this, approximately $1.3 trillion could classify as "green". The country intends to expand the use of non-hydro renewable energy sources in its total energy mix from 12 percent in 2020 to 28-33 percent by 2030. The private sector will be key to provide investments to develop renewable energy and a strong and resilient transmission and distribution (T&D) infrastructure.
"The ESG agenda is part of Neoenergia's business strategy and permeates all our actions for sustainable development. Linking this funding to environmental, social and governance goals brings transparency to our operations and reinforces our commitment to the country's energy sector", says Eduardo Capelastegui, Neoenergia's CEO as of July 15, 2022.
"In the year we celebrated Neoenergia's 25th anniversary, this project reinforces our performance based on solid financial discipline. The funds strengthen our purpose of performing an effective business model, based on credit lines with competitive conditions. This reiterates our strategy of diversifying funding sources to support the development of the business plan", says Leonardo Gadelha, Executive Director of Finance and Investor Relations at Neoenergia.
As the sustainability coordinator for this project, IFC is also helping Neoenergia Coelba develop its first sustainability-linked financing (SLF) framework and define ambitious corporate climate and gender targets. The company aims to promote the inclusion of women in the infrastructure sector and in technical jobs by reaching 10.7 percent of female electricians in 2026.
"This innovative funding is aligned with IFC's energy strategy in Brazil, which identifies transmission and distribution as a key segment for the energy sector's decarbonization. Also, by supporting a key player like Neoenergia Coelba, IFC aims to send a positive market signal, boosting private sector competitiveness in Brazil. This will further contribute to the growth of the sustainable finance market and to support the country's climate goals," says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
With this project, IFC aims to tackle the development challenges of Latin America and the Caribbean region by enhancing connectivity and reducing infrastructure gaps. We have been investing in Brazil's private sector since 1957, helping the country boost inclusive growth, innovation and employment.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org .