A Loan Agreement was signed today in city of Havana, between the Government of the Republic of Cuba and Kuwait Fund for Arab Economic Development, whereby Kuwait Fund will make a loan to the Republic of Cuba in the amount of Kuwaiti Dinars eight million eight hundred thousand (equivalent to about US$ 30 million) for financing the Construction of 34 Small Hydropower Project.
The Loan Agreement was signed by Mr. Manuel A. Vale Marrero, President of Banco Exterior de Cuba, on behalf of the said Bank, whereas the Guarantee Agreement was signed on behalf of the Republic of Cuba by His Excellency Mr. Felix Martinez, Vice Minister of Finance and Prices, and the Project Agreement was signed on behalf of the Union Electrica by Mr. Livan Arrontes Cruz, Director General of Union Electrica, while the 3 Agreements mentioned above were signed on behalf of the Kuwait Fund for Arab Economic Development, by H.E. Mr. Abdulwahab Al-Bader, Director-General of the Fund, in attendance of Mr. Badr Al Awadhi, Ambassador of the State of Kuwait to the Republic of Cuba and Mr. Abdullah Al-Musaibeeh, Regional Manager for Latin America and the Caribbean Countries at the Fund.
The project aims at contributing to financing the Construction of 34 Small Hydropower Projects in Republic of Cuba.
The purpose of the Project is to generate electric power by taking advantage of existing water reservoirs (dams) and to reduce the importation of fossil fuel, which also would reduce emissions of CO2 into the atmosphere. The Project improves electric services to people and other facilities mainly in rural areas that will reduce immigration towards cities and develop agricultural production. The Project supports the national industry, also contributes and strengthens the capacity of research institutions and universities in the hydropower sector.
The Project consists of the construction of 34 Small Hydropower Plants (SHPs) with a total capacity of approximately 14.6 MW which will be installed at the bottom of existing dams. It includes supply, construction and installation of 3 linking substations with all associated equipment, to be connected to the national grid, including of about 75 km length of 34.5 & 13.8 kV distribution lines, and to improve about 10 km of access roads to the SHPs sites. It also includes procurement of construction and maintenance vehicles, construction equipment, maintenance equipment and spare parts related to the Project and supply of equipment for production of small hydraulic turbines, spare parts and materials related to the small hydropower plants. Moreover, supply of equipment and expansion of scientific training research centers and universities to enhance in general, the development of hydropower sector as well as the institutional support and consulting services for the detailed designs, preparing tender documents and supervision of construction of the Project. The project implementation period is estimated to take seven years.
The total cost of the Project, including price and quantities contingencies, consulting services, taxes and customs, interest during construction, is estimated at about 74.0 million Cuban Pesos, equivalent to about 21.8 million Kuwaiti Dinars of which about 37.0 million Cuban Pesos, equivalent to about KD 11.0 million, is in foreign currencies, representing 49.6% of the total project cost. The Fund’s loan will cover 81% of that part of foreign currencies and about 40% of the total project costs. The Government of Cuba has undertaken to make available promptly as needed in accordance with the program of execution of the Project all additional sums which shall be required for the carrying out of the Project.
The Loan is made for a term of 21 years, including a grace period of 7 years, and will be amortized in 28 semi-annual installments, the first of which will be due on the first date on which or any interest or other charges on the loan shall fall due after the elapse of the grace period. Loan will bear interest at 2.5% per annum in addition to a charge of 0.5% for meeting administrative costs and the expenses of implementation of the Loan Agreement.
Upon the signature of this loan agreement, this loan will be the fifth accorded by the Fund to the Republic of Cuba. It will be the first one in energy sector. The four previous loans were in water and sanitation sector. The total amounts of those loans are of about KD 22.5 million, equivalent of about $ 76.5 million.