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Liquefied Natural Gas Fuels Latin America’s Energy Options


When Panama’s schools shut down unexpectedly in May of 2013—along with supermarkets, movie theaters, clubs, and many businesses—the culprit was one of the worst droughts in history. Record low rainfall that year wreaked havoc on the national electricity system, which depends heavily on hydroelectric power, and the government declared a drought emergency in one-third of the country.

Energy crises have played out similarly in Brazil, where hydropower accounts for approximately 70 percent of total electricity generated. It, too, has been regularly afflicted by long dry spells with disastrous outcomes: a recent drought lasted from 2014 to 2017.

To mitigate the risk of electricity shortages, many officials throughout Latin America are turning to Liquefied Natural Gas (LNG) as a new source of energy when there are disruptions to hydro supplies. LNG is a cleaner backup to hydro than diesel or heavy fuel oil—an appealing selling point to governments already battling against climate change. LNG also helps mitigate the intermittence of wind and solar power—ultimately acting as an enabler of renewable energy.

IFC is helping governments in the region promote development of natural-gas-based power generation, demonstrating how the private sector can help governments make this transition to more dependable energy. In Panama, IFC’s recent $144 million investment helped build the first LNG-to-power facility. In Brazil, IFC is supporting two significant investments. The Port of Sergipe thermal plant—which received $200 million in financing from IFC—is Brazil’s first large-scale infrastructure venture that is sponsored in full by the private sector.  And at the Port of Açu, IFC has invested $288 million to finance initial stages of the first fully-integrated private LNG hub in Brazil (one of the few in Latin America). 

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