Summary of Proposed Investment
Project Number
10117
Company Name
C.A. La Electricidad de Caracas
Date SPI Disclosed
Dec 27, 1999
Country
Venezuela, Republica Bolivariana de
Industry
Infrastructure
Status
Completed
Sector
Distribution Business
Department
Gbl Infrastructure & Natural Resources
Environmental Category
B - Limited
Previous Events
Approved : Feb 3, 2000
Signed : Jul 25, 2000
Invested : Aug 9, 2000
Project Description
Summary Of Project Information (SPI)
| Project Name | Venezuela - EDC II |
RegionLatin America and Caribbean
Sector
Project No010117
Projected Board DateJanuary 10, 2000
Company NameC.A. La Electricidad de Caracas (EDC)
Technical Partner and/or Major Shareholders
C.A. La Electricidad de Caracas (EDC) is the major private utility in Venezuela and is owned by over 68,000 shareholders, none of which own more than 14% of the company.
Project Cost Including proposed IFC investment
The proposed investment is an emergency loan to EDC of US$30 million for IFC’s own account.
Location of project and Description of site
Venezuela has been devastated by extensive flooding and mudslides caused by three days of heavy rains from December 15 to 17, 1999. Estimates of the number of dead, in what authorities describe as the worst natural disaster in modern times in Venezuela, vary at this time, but exceed several thousand. In the Caracas area, the poor residents of the shantytowns that climb the mountains surrounding Caracas were particularly affected, leaving many homeless. The hardest-hit area was a 60-mile stretch of coast in Vargas, an area just north of Caracas. Vargas is within the concession area of Electricidad de Caracas. EDC estimates its damages at about US$100 million. In addition, it is incurring extraordinary expenses for emergency work and participation in the rescue operations.
Description of Company and Purpose of Project
The proposed project is to reinstate electricity service to poor neighborhoods that were devastated by the recent flooding. This includes restoration of public lighting and providing electricity service to small stores, gas stations, remote water and sewage pumping stations, schools, medical clinics and public offices. The bulk of the investment will be focused in the Litoral coastal area where 90% of the 90,000 residences were largely destroyed. Overall, EDC estimates that about eight percent of its electricity distribution system was damaged by the flooding and that the cost of repair will exceed US$100 million.
EDC has agreed to use the IFC investment exclusively for poor and middle income areas, which are the least profitable sectors of the company’s business. The IFC loan will encourage rapid repair of the system in these areas, which otherwise would receive lower priority or be done after and to the extent that the company has received insurance proceeds.
Environmental Category and Issues
During appraisal of a June 1999 IFC loan to EDC (project number: 009624), it was established that EDC has a strong internal environmental capability and corporate policy. The environmental review summary for this category B project, which was issued on May 24 and is available from the Infoshop, also describes the company''s approach to the development of distribution infrastructure. EDC has also reconfirmed its intention to comply with all applicable World Bank environmental and social policies and guidelines. Environmental clearance of this loan has therefore been given on the basis that it complements the June 1999 loan and in consideration of the emergency situation in the project area. The emergency loan is believed to be beneficial as it will be used for reconstruction of existing facilities to equivalent or better standards, providing enhanced public safety and street lighting. IFC social specialists will visit the disaster area as soon as possible and advise EDC on project implementation.
The ERS for the June 1999 loan to EDC (project number: 009624) is available from the Infoshop.
| Host country location of environmental documents | The ERS for the June 1999 loan to EDC (project number: 009624) is available at: Avenida Vollmer San Bernardino Apartado 2299 Caracas 1010-A Venezuela |
Date SPI sent to InfoShop December 27, 1999
“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”
For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 974-4384
Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).
Sponsor / Cost / Location
Related ESRS/ERS
