World Bank lends $40 million to DBP

MANILA, Philippines - The Development Bank of the Philippines (DBP) has received a $40-million rural electrification loan from the World Bank.

The loan is part of an agreement between the two financial institutions for rural power projects (RPP)-adaptable program loan (APL) signed in 2003.

The loan is designed to service electrification requirements of rural areas not accessed by the existing grids of the National Power Corp. (Napocor). The principal target will be the Mindanao region.

DBP officials said that their first option would be renewable energy technology.

The original APL consisted of a $10-million loan to DBP for electric cooperatives and a $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

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 the government requested additional financing as the original $10-million loan had been fully committed by the state-owned bank a year ahead of schedule.

 “The additional financing will enable the DBP 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,” David said.

He added that the additional financing would be used for several projects, a significant number of which are tapping renewable and earth-friendly technologies, including mini-hydroelectric and biomass projects.

The initial loan 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.

Meanwhile, World Bank country director Bert Hofman said 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,” he added.

Hofman explained 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.

 “Electricity is a fundamental instrument in the quest for equitable and inclusive rural growth,” Hofman stressed.