The Board of Directors of the Caribbean Development Bank (CDB) approved a blended financing package of US$4.2 million loan and the equivalent of US$1 million in grant resources to further support the transformation of the energy sector in St. Vincent and the Grenadines. The financing approved will support the replacement of 7,220 streetlights with high-efficiency light-emitting diode (LED) street lamps; the implementation of energy-efficiency measures in 20 government buildings; and the construction of a solar photovoltaic (PV) plant.
The CDB loan includes US$2 million from the European Investment Bank Climate Action Line of Credit (CALC) with CDB. St. Vincent and the Grenadines will benefit from an interest rate subsidy associated with the CALC. The investment grant is the second from CDB’s Sustainable Energy for the Eastern Caribbean Programme (SEEC), and comprises contributions of EUR554,000 from the European Union – Caribbean Investment Facility and GBP316,000 from the United Kingdom through its Department for International Development. SEEC had previously provided a technical assistance grant for the preparation of an energy audit for the targeted buildings.
“The Project supports the creation of a more sustainable energy mix for St. Vincent and the Grenadines,”said Daniel Best, Director of Projects, CDB. “Through this investment, CDB reinforces its commitment to partnering with the Government to improve the competitiveness of the country’s economy, by promoting energy-saving initiatives and an expansion in renewable energy that will contribute to national and global climate mitigation targets,” he noted.
In St. Vincent and the Grenadines, imported petroleum accounts for 96 percent of energy used, including energy for electricity generation. This requires a significant commitment of foreign exchange and increases the vulnerability of the economy to external shocks. In 2012, the national fuel bill was as high as 10 per cent of its Gross Domestic Product (GDP), with electricity-related fuel imports equivalent to about 5.2 per cent of GDP. The high and volatile cost of energy is reflected in substantial government electricity bills for street lighting and public buildings.
The Project will reduce the Government’s electricity bill by an estimated US$2 million per annum, increasing fiscal space for other competing commitments. Savings in electricity consumed will reduce diesel imported annually by an estimated 179,000 imperial gallons, while contributing to St. Vincent and the Grenadines’ target of a 22 percent reduction in greenhouse gas emissions by 2025.
The Government and the electric utility company, St. Vincent Electricity Services Limited, will contribute their own resources of US$545,000, and US$306,000, respectively.