Ecuador plans $263 million investment in electric connection with Peru

QUITO, Nov 23 (Reuters) - Ecuador's government said on Wednesday it plans to invest $263 million to boost its electric connection with Peru through a 500-kilovolt line, in a project aimed at replacing thermal generation and reducing energy costs.

The project, which is set to be constructed over five years, includes a 544-km high-voltage line between the two countries.

On the Ecuadorian side, authorities plan to install two transmission lines covering 280 km, as well as a new electrical substation.

The Inter-American Development Bank (IDB) will finance $125 million of Ecuador's total planned investment, with a flexible financing loan due in 23 years and a grace period of 7.5 years.

Another $125 million will be co-financed by the European Investment Bank and the difference will be covered by the state-owned Electric Corporation of Ecuador (CELEC), which will also operate the project.

"With the new interconnection, energy exchanges will be carried out between Ecuador and Peru to take advantage of hydrological complementarity, generating economic benefits for the Ecuadorian electricity sector," CELEC said in a statement.

The Peruvian portion of the project will be financed by the country's private sector, the IDB said in a statement Monday, adding the tender was made under a private concession model, which includes 30 years of commercial operation.

Reporting by Alexandra Valencia; Editing by Chris Reese

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