The Japan International Cooperation Agency (Jica) has signed an ODA (official development assistance) loan agreement in support of a geothermal project in Ecuador.

Jica is lending 6.58 billion yen (US$43 million) payable in 30 years, with a ten-year grace period, at an annual interest rate of 1.15%.

The borrower is Empresa Pública Estratégia Corporación Eléctrica del Ecuador, based in capital city of Quito.

The Chachimbiro Geothermal Development Project (Phase I) will be built in the province of Imbabura in northern Ecuador. The loan will cover exploratory well drilling and engineering services ahead of the Phase II loan (power plant construction) to promote the smooth implementation of the project.

The loans are in support  of the procurement of drilling equipment and materials, and the drilling of exploratory wells (four exploratory wells and one reinjection well). They also cover consulting services (drilling supervision and procurement support, fumarole testing, resource evaluation, F/S preparation for power plant construction, etc.).

Preparation work such as excavation site development and access roads will not be covered by the yen loans, nor will be the temporary construction of around 20 kilometres of power distribution lines.

Power shortages

The implementation schedule involves the completion of the project by August 2029, when consulting services end. A request for proposal for consulting services (including detailed design work) is expected by the first quarter of 2025.

In April 2026 there will be tendering of announcement of initial procurement package for international competitive bidding on project construction.

Ecuador is heavily dependent on hydroelectric power, and as such, is exposed to power shortages during times of drought.

The untied loan qualifies for preferential terms within the framework of Global Environmental Problems and Climate Change. The project contributes to Sustainable Development Goals 7 (affordable and clean energy) and 13 (climate action).

The country has plenty of geothermal resources that can be used to mitigate this. Already, several projects are at the planning stage, including  Tufiño-Chiles-Cerro Negro (330MW), Chalupas (293MW), Chacana-Cachiyacu (83MW), and Jamanco (26 MW).