Peru will promote private sector investment in electric mobility with IDB support

Peru will encourage private sector investments in sustainable electric transport solutions with help from a $20 million loan approved by the Inter-American Development Bank (IDB).

The program will contribute to reduce fossil fuel consumption and greenhouse gases emissions through the promotion of low-carbon transportation solutions. To this end, it will offer concessional resources from the Clean Technology Fund (CTF) as well as IDB’s own resources to provide long-term financing for the purchase of electric vehicles. The operation also includes a gender inclusion focus aimed at promoting the participation of women entrepreneurs in the public transportation vehicles and charge infrastructure sectors.

The program will provide long-term credit through individual sub-loans to finance electric vehicle projects that will result in the migration to EV technology. These credits will be delivered through the Corporación Financiera de Desarrollo (COFIDE, the Financial Corporation for Development), which is the national development bank that aims to promote productive activities in Peru.

The resources will be delivered to final beneficiaries through accredited financial institutions. Financing will be made available to eligible projects, and may or may not include investments other than the vehicle itself, such as charging infrastructure. Potential borrowers shall not only prove their investments are financially sustainable, but they must be technically, institutionally, environmentally and legally viable as well, as per IDB standard practice and operational policies.

The program seeks to replace internal combustion engine vehicles with electric vehicles, particularly in the public transportation sector (mainly buses, taxis, and three-wheeled moto-taxis). It will also cover battery charging stations, preferably renewable-energy powered ones, and provide holistic support, addressing supply and demand of clean electricity in the domestic market.  

Electric vehicles have emerged as a technology with potential to contribute to decarbonizing and lowering pollution in the transport sector, as well as increasing energy efficiency and thus productivity.  The main benefit of EVs –compared to internal combustion engine vehicles– is that they are more energy efficient and do not directly generate greenhouse gas emissions from the burning of fossil fuels, effectively contributing to meet Peru’s Nationally Determined Contributions (NDCs). In addition, these vehicles do not produce polluting gases that affect people’s health.

The IDB loan consists of a $10.5 million tranche from the Bank’s ordinary capital for a 20.5-year term, with a 6.5-year period of grace and interest rate based on LIBOR. The $9.5 million tranche from the Clean Technology Fund will have a 20-year term and a 10.5-year grace period.