To be more specific, IDB has approved a BRL320 million (US$84.6 million) corporate loan from its ordinary capital to finance Aegea`s investments in the Brazilian water and sanitation sector.
The IDB loan will support the expansion of the water and sanitation network of Aegea's concessions, and the improvement of its operational performance. The company has 41 concessions in the Brazilian states of Maranhão, Mato Grosso, Mato Grosso do Sul, Pará, Rio de Janeiro, Rondônia, Santa Catarina, and São Paulo, accounting for 17 percent of the private sector's participation in the water and sanitation sector in Brazil.
By extending a 12 year door to door financing in Brazilian Reais, the IDB loan will enhance the company's financial sustainability, providing a loan term in line with the long-term nature of the company's investments, and matching the currency denomination of its revenues.
This will be the first IDB loan under the Brazilian Reais Local Currency initiative of the IDB, which aims at better serving the needs of its private sector clients in Brazil. Jean-Marc Aboussouan, Chief of the Infrastructure Division at the IDB's Structured and Corporate Finance Department, stated:
"Through Real denominated loans, the IDB will help to eliminate the foreign exchange risk exposure of tariff-sensitive infrastructure projects in Brazil."
As part of its engagement with the Bank, Aegea is participating in two IDB-led sustainability initiatives, including an assessment of Aegea's water loss reduction program to further improve its water loss rate, and an energy savings audit to assess potential efficiency increases in its operating companies.