The Government of Australia and ADB Pilot a Financing Innovation to Support Good Governance

The Government of Australia and the Asian Development Bank (ADB) are piloting an innovative mechanism to support power sector reforms in Samoa. The ADB has approved a financing package to support the Electric Power Corporation's (EPC) eight-year investment plan to improve the reliability and security of power supply.

Under this financial package, ADB will provide a loan to Samoa, while the Government of Australia, through its international aid agency AusAID, will provide grant resources under a “loan buy down mechanism” in support of agreed reforms in the power sector. The investment plan is accompanied by power sector reforms to ensure that the investments benefit end-consumers. The Australian grant will be used to 'buy down' part of the Samoan project debt. The Government of Australia has committed financing of A$ 4 million under the loan buy down mechanism. The funds will be invested by ADB until a series of reform measures have been achieved in Samoa. Under the agreed terms of the buy-down, the specific reform measures will be achieved by the end of 2012. The project will also promote renewable energy and conservation and reform the power sector to give more sustainable and affordable electricity services to all consumers. The Government of Samoa has embarked on critical reforms to improve the quality of power services to consumers in Samoa. The reforms aims to improve the operational efficiency and financial performance of the government-owned Electric Power Corporation (EPC), and establish effective price and technical regulations to promote transparency, contestability and private sector participation.

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