All agreed loans

Iceland. RARIK ohf

Date of loan: 12 Mar 2007
Country: Iceland
Customer: RARIK ohf
Amount in EUR: EUR 30 million
NACE sector / loan type: Electricity, gas, steam and hot water supply
Business area: Energy and environment

Project

The loan totalling EUR 30 million will be used to finance a part of RARIK's investments in the Lagarfoss hydro-power plant and to finance improvements in the distribution of electricity in the company's operational area. Following the construction of a new unit, Lagarfoss will more than triple its power output capacity to 190 GWh annually. The improvements in the distribution network will mainly focus on the replacement of single-phase lines with three phase-cables and overhead lines with cables.

The state-owned company RARIK was founded in 1947 with the purpose of electrifying some remote parts of Iceland. The company's distribution network covers 80-90% of Iceland's inhabited areas and serves approximately 20% of the population. The extension of the Lagarfoss Plant is expected to increase RARIK's net earnings and make the company less reliant on energy purchases. The distribution infrastructure improvements will strengthen the competitiveness of enterprises in the rural areas of Iceland.

Sustainability summary

RARIK's investments in the Lagarfoss hydropower plant will have a positive environmental impact. It will help to improve the electricity infrastructure in Iceland by utilising renewable local energy resources. It is estimated that the project will result in a significant decrease of greenhouse gases. A 50% share of the project qualifies as an environmental investment.