MANILA, APRIL 14, 2009— The World Bank’s Board of Executive Directors approved today an additional US$40 million loan to the Development Bank of the Philippines (DBP) for the country’s Rural Power Project (RPP) aimed at reducing poverty and improving the quality of life of 10,000 rural households in hard-to-reach, isolated and poorest areas of the country, particularly in Mindanao.
The additional financing seeks to scale-up a pipeline of rural power projects identified under the RPP Adaptable Program Loan (APL) signed by the World Bank and the DBP on December 8, 2003. It will also support rural electrification by targeting more households; encouraging more public-private sector partnerships in generating, transmitting and distributing electricity with emphasis on new and renewable sources of energy; and upgrading electric cooperatives to become financially viable and operationally efficient.
APLs provide phased support for long-term development programs involving a series of loans that build on the lessons learned from the previous loans in the series.
World Bank Country Director Bert Hofman said that the additional financing for rural electrification will have a direct impact on poverty in the rural areas. “Rural electricity provides more opportunities for countryside entrepreneurship, thus expanding economic activities in these areas,” stressed Mr. Hofman.
He explained that households and communities could use electric-powered wells for clean water, thus preventing water-borne diseases. Electricity provides opportunities to increase the effectiveness of social services, such as making available medicines or vaccines that require refrigeration. Children will have more time for study at home. Families, he said, could have access to information through television and computers that could help better their lives. “Electricity is a fundamental instrument in the quest for equitable and inclusive rural growth,”Mr. Hofman stressed.
The original APL consisted of a US$10 million loan to the DBP to support electric cooperatives and a US$9 million grant from the Global Environmental Facility (GEF) being implemented by the World Bank to finance the Department of Energy’s programs on renewable energy technologies. This lending program seeks to support the government’s pro-poor flagship initiatives aimed at improving the quality of life in the rural areas through the provision of adequate, affordable and reliable energy services, in partnership with the private sector.
The GEF is a global partnership among 178 countries, international institutions, non-governmental organizations and the private sector to address global environmental issues while supporting national sustainable development initiatives.
DBP President and Chief Executive Officer Reynaldo G. David said that the government requested additional financing because the original US$10 million loan had been fully committed by the state-owned bank a year ahead of schedule. He stressed that the initial loan has provided electrical connection to at least 10,000 households in the rural areas, attracted seven more renewable energy technology suppliers, and avoided an estimated 11,466 metric tons of carbon dioxide that cause climate change.
“The additional financing will enable the DBP – and the energy sector — to further expand public-private partnership in the provision of energy access, particularly in Mindanao where over 50 percent of the scaled- up projects will take place,”Mr. David said. “The additional resources will benefit 10,000 new customers in poor rural areas.”
Mr. David also said that the additional financing will be used for several projects, a significant number of which are tapping renewable and earth-friendly technologies, including mini hydroelectric and biomass projects.
Department of Energy Secretary Angelo T. Reyes said that the US$40 million additional financing “is the most effective way to respond to an immediate opportunity to enhance development impact, particularly in power-constrained areas such as Mindanao.”
“All these projects will contribute towards the global objective of mitigating climate change caused by greenhouse gas emissions through wider use of clean, renewable energy technologies in power generation,”Secretary Reyes added. “This will be complemented by grid system rehabilitation and loss reduction in distribution systems operated by electric cooperatives which will lead to the increased efficiency of grid-based supply and the resultant avoidance of polluting diesel-fueled power generation.”
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For information on the World Bank’s support to the Philippines, please visitwww.worldbank.org.ph
For more information, please visit the Projects website.
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