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."