Belo Horizonte, Brazil — (METERING.COM) — October 19, 2009 – Brazil’s State of Minas Gerais is to receive a $10 million loan from the Inter-American Development Bank for metering and other projects to expand electricity services in 19 northwestern municipalities.
The project will finance energy service coverage expansion by awarding incentives or contributions granted by the state and federal governments to the power company Companhia Energética de Minas Gerais Distribuição S.A. (CEMIG) to promote investments in transmission, rehabilitation, and expansion of the power distribution grid.
These incentives are needed because electricity rates in rural and low income periurban areas fall short of covering basic infrastructure costs.
Although Minas Gerais is Brazil’s third largest economy, its northwestern region, which is home to 328,000 people, remains fairly underdeveloped, largely due to insufficient infrastructure in the energy sector. For example, many of the area’s 480 large scale, 13,000 mid sized, and 1,000 small farmers – mostly grain producers – use diesel powered irrigation systems for lack of adequate electricity services.
The Bank’s funding will support plans to connect not only farmers, replacing the diesel-based irrigation, but also rural and periurban homes.
Most of the funds will finance incentives for high and medium voltage transmission works, including expansion of three existing substations and construction of three new substations, 160 km of 138 kV transmission lines, and 1,370 km of medium voltage feeders.
In addition, the funds will finance incentives for investments including expansion of the power distribution grid to reach rural and periurban households, installation of distribution lines and meters, and installation in each household of four power outlets.
These investments will increase the distribution system’s efficiency by lowering energy losses.
An additional $6.22 million in local counterpart funds for the project will be provided by the federal and state governments.