Barbados’ energy sector is in line for a major boost now that Government has secured approval for a US$150 million loan from the Inter-American Development Bank (IDB).
That is the expectation of Minister of Energy and Business Development and Consumer Affairs Kerrie Symmonds following the IDB’s announcement on Wednesday that its board of executive directors in Washington DC, United States, approved the policy-based programmatic loan “to strengthen energy security in Barbados”.
The senior minister, who is responsible for coordinating the productive sector, said yesterday that the money “goes to the Consolidated Fund” as his ministry worked with the Ministry of Finance to determine priority areas but that the overall objective was to strengthen the energy sector.
“Our role in the Ministry of Energy is to ensure that we have met the policy requirements which are a threshold for accessing the funding. The next step is that we work with the Ministry of Finance to determine the major priorities confronting the country,” he explained.
“The funds can be used for any purpose determined as a first priority by this collaborative process. At this stage, there are a number of things on my radar, including increasing the level of resilience in the energy sector.
“For example, upgrading the grid, improving our energy regulation capacity, accelerating the process of undergrounding of transmission and distribution cable, engaging in diversification projects, for example expanded natural gas distribution and biofuels production.”
Policy requirements
Symmonds said the authorities “had to meet those policy requirements as a threshold for accessing the funds”.
“So having successfully met the policy requirements and the funds now being available, it is to be determined by these departments of Government as to how we prioritise the deployment,” he added.
The IDB said separately that the programme “will help modernise Barbados’ electricity sector through reforms that foster a more competitive, resilient and sustainable energy market, supported by coordinated regulation and private sector participation”.
“It will also contribute to improving system stability and reducing energy imports,” the bank stated.
“More than 135 000 electricity customers will directly benefit from the programme through reduced exposure to international price fluctuations. In addition, independent power producers, lenders and project developers will face lower investment risks and reduced financing costs.
“The population of Barbados, as well as the broader economy, will also benefit indirectly from reduced dependence on energy imports and from progress toward achieving national energy targets.”
The IDB also said the “operation will accelerate the integration of new technologies into the electricity sector and promote competitiveness and private investment in energy generation and storage”.
Barbados will have 20 years to repay the US$150 million loan, with a grace period of five and a half years. The IDB said the interest rate is based on the secured overnight financing rate (SOFR). The SOFR rate yesterday was about 3.6 per cent. (SC)
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