The European Investment Bank (EIB) is providing a USD 50 million loan (some EUR 54 million) to Companhia Energética do Ceará S.A. (Coelce) to expand and modernise the electricity network in the Brazilian North-eastern State of Ceará.
Coelce, controlled and operated by the ENDESA group, is an electricity distribution company that operates in the State of Ceará under a 30-year renewable concession. It has currently some 1.8 million customers; its concession area covers 147,348 km², includes 184 municipalities and has a population of some 6.9 million inhabitants.
This project is part of the large investment programme implemented by Coelce following its privatisation in 1998, when the Endesa group took over the control of its operations. The programme includes the studies, supervision, procurement, erection, commissioning and operation of new, medium to low voltage schemes (69 to 0.2 KV) and the refurbishment of existing schemes at the same voltage levels.
The project will provide additional capacity to cater for increasing demand, reduce electricity losses and improve the quality and reliability of electricity distribution throughout Coelce's concession area, which is one of the less-advanced regions in Brazil. As a competitive and reliable electricity supply will help to attract new industry and services, the project will have a positive impact on the region's economic development.
The 10-year loan with four-year grace period is guaranteed by BBVA and SCH. Risks of currency non-transfer, expropriation, war and civil disturbance are covered by the European Union (EU) budget guarantee.
The loan is provided in the context of the EU co-operation policy with third countries. In Asia and Latin America (ALA), the EIB may lend up to EUR 2.48 billion during 2000-2006 to support capital investment projects implemented by subsidiaries of EU companies or joint-ventures between EU and ALA firms, or investment that results in environmental improvements or fosters regional integration. The EIB was set up in 1958 to finance investment furthering EU integration. It lends for regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank operates in some 150 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.
In 2000, the EIB provided loans totalling some EUR 36 billion. The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB works on a non-profit basis and can pass on to project promoters the excellent conditions it obtains on the markets. The EIB may finance up to 50 percent of project cost. On average it provides one third of the funding and co-finances investments with other institutions.