Equatorial Alagoas (IFC-48848)

Regions
  • Latin America and Caribbean
Geographic location where the impacts of the investment may be experienced.
Countries
  • Brazil
Geographic location where the impacts of the investment may be experienced.
Specific Location
State of Alagoas
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Approved
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Oct 10, 2024
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
Equatorial Alagoas Distribuidora de Energia S.A
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Energy
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 250.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Project Cost (USD)
$ 250.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Dec 27, 2024

Disclosed by Bank Jun 7, 2024

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

The proposed IFC investment consists of two loans of up to, in aggregate, US$250 million (i) the first of which to Equatorial Alagoas Distribuidora de Energia S.A. (“Alagoas”, “EAL” or the “Company”), a subsidiary of Equatorial Energia S.A. (“Equatorial Energia” or the “Group”), of an amount of up to BRL 500 million (approximately US$100 million) for IFC’s own account, and (ii) the second of which to another subsidiary of Equatorial Energia with a tranche of up to US$75 million for IFC’s own account and a tranche of up to US$75 million for the account of participants (the “Project”).The first loan consists of an 8-year senior green A Loan to Alagoas for financing a portion of the Company’s capex program for 2023 to 2024, including its programs for loss reduction, service quality improvement, and capacity expansion (the “Alagoas Loan”).The proposed second loan is a potential up to 8-year corporate facility of up to US$150 million to another subsidiary of Equatorial Energia, with use of proceeds to be aligned with those of the first loan. This ESRS and associated Environmental and Social Action Plan (ESAP) have been developed for the subsidiary EAL and a defined Use of Proceeds up to BRL500 million. IFC is planning to do similar investments with other subsidiary of Equatorial Energia for additional up to US$150 million, which will follow the same limited risk criteria for funding only Category B projects. Once the use of proceeds is defined, any investment in this subsidiary will be object of specific due diligence and appraisal, including development of their respective ESRS and ESAP.  Alagoas Loan The Company holds power distribution concession until 2049 to serve over one hundred municipalities in the State of Alagoas, in the northeast of Brazil. IFC proceeds will include the acquisition of new transformers, measuring equipment, replacement of obsolescent equipment at substations and existing distribution lines. The Alagoas Loan does not include any new transmission line, distribution lines or works covering connection of new users.  New footprint is associated to the construction of four new substations located within modified rural habitat or in urban areas, far from Indigenous lands or biodiversity sensitive areas. EAL is a steady operation with BRL2 billion of annual revenues. The Company is controlled by Equatorial Energia S.A., a former IFC client and the holding of one of Brazil’s largest utility groups.                                                   

Investment Description
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Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

As stated on the company's website (translated with DeepL.com), Equatorial Energia is Brazil's 3rd largest distribution group in terms of number of clients. Founded in 1999, the company has advanced in the consolidation of the energy distribution sector in Brazil and currently operates 7 concessionaires in the states of Maranhão, Pará, Piauí, Alagoas, Rio Grande do Sul, Amapá and Goiás, serving around 13 million customers in these regions. The company also operates in the Transmission sector and recently entered the Sanitation sector, becoming the first multi-utilities company in the country, as well as acquiring 100% of the shares in Echoenergia S.A., starting a chapter in the Renewables sector and effectively becoming an integrated player in the energy segment.

Private Actor 1 Private Actor 1 Role Private Actor 1 Sector Relation Private Actor 2 Private Actor 2 Role Private Actor 2 Sector
- - - - Equatorial Energia SA Client Energy

Contact Information
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The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org.  You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/

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