ENEL COLOMBIA FL

The project will finance investments in sustainable electricity distribution and generation from renewable energy sources.

The aim is to develop sustainable energy infrastructure supporting Colombia's decarbonisation pathways. As such, the project contributes to national climate mitigation objectives, as well as to security and reliability of energy supply, thus enhancing economic growth and quality of life. In line with the UN 2030 Agenda, the project addresses several strategic development goals (SDGs), in particular SDG 7 (affordable and clean energy) and SDG 13 (climate action), while mainstreaming job creation. The project therefore supports and contributes to people, planet, prosperity and partnerships dimensions of the European Consensus on Development.

The operation concerns a framework loan to Enel Colombia to support investment for the period 2023-2026.

The operation contributes to the development of sustainable energy infrastructure in Colombia. While, on the one hand, new renewable energy generation capacity in the targeted country supports decarbonization paths and contributes to national climate mitigation objectives, on the other hand, the grid investments contribute to increasing the security and reliability of supply, thus supporting the economic growth and improving the quality of life.

The operation supports the EU policy objectives and development of the European private sector in the fields of sustainable energy, energy security and climate change outside Europe, as well as several United Nations Sustainable Development Goals ("SDG"). The project is strongly aligned to the achievement of the Bank's objectives in terms of Climate Action finance outside the EU and Colombia's Nationally Determined Contributions (NDC's). It also contributes to the climate and energy priority under the Global Gateway, which promotes the green transformation and commitments of the Paris Agreement on climate change.

The Project comprises the financing of: (i) the increase in renewable energy generation capacity, which will contribute to the reduction of carbon emissions and air pollution, addressing the market failure of negative climate and environmental externalities; and (ii) the refurbishment and modernisation of the electricity distribution grid in the region of Bogotá / Cundinamarca, which will improve the quality and reliability of electricity supply and enabling the connection of new system users, including renewable generators, and the sustainable mobility in the area.

The Project has broader social benefits considering the costs of implementation and operation achieved by the Promoter and the economic value of the distribution network and clean/renewable electricity generated at a cost below the cost of fossil-fuel based alternatives in Colombia.

EIB financing provides flexible structure and favourable terms tailored to the Promoter's needs and not available in the local banking market, including extension of tenor well above market availability, match with economic life of the assets, upfront disbursements and sculpted repayments.

EIB complements the existing standards implemented by the Promoter through provision of advice on environmental and social matters. EIB contribution facilitates the financing of the renewable energy projects that require high amounts of investment and are essential to the country's development.

The Promoter has extensive experience with strong design, implementation, and project management capabilities, supported by EIB technical contribution improving the quality of the project.

The operation intends to generate environmental benefits by supporting sustainable energy infrastructure that help to mitigate climate change. Some of the projects and in particular the renewable energy projects to be financed by this operation are expected to require an Environmental Impact and Social Assessment (ESIA) under the relevant national legislation. However, if located within the EU, the renewable energy generation plants could fall under the Annex II of the Environmental Impact Assessment (EIA) Directive 2014/52/EU (amending Directive 2011/92/EU), requiring the competent authorities to determine whether an EIA is required. With regards to the electricity distribution allocations, the majority of the schemes currently proposed comprise of medium and low voltage assets. Therefore, if located in the EU, they would fall neither under Annex I nor under Annex II of the EIA Directive. High Voltage lines and/or substations may fall under Annex I or II of the EIA Directive. Subject to their characteristics and cumulative impact, an EIA may be required. Nonetheless, the Bank will assess the capacity and procedures of the Promoter to ensure the projects' compliance with national environmental, social and biodiversity regulations, as well as with the EIB's environmental and social standards and the principles of relevant EU Directives (i.e. Habitats Directive 92/43/EEC and Birds Directive 2009/147/EC).

The promoter has to ensure that implementation of the project will be done in accordance with the EIB's Guide to Procurement, specially discarding any type of local content or local preference requirement at sub-project (allocation) level.