On March 23, Japan International Cooperation Agency (JICA) signed a loan agreement with Neoenergia Coelba, the electricity distribution utility serving the State of Bahia of the Federative Republic of Brazil and held a signing ceremony in Salvador on June 15.
This transaction represents JICA’s first Sustainability-Linked Loan (SLL) worldwide, with terms tied to the achievement of Sustainability Performance Indicators. It also marks the inaugural application of JICA’s Sustainable Finance Framework, developed in partnership with MUFG Bank for co-financing operations, setting a new milestone in the agency’s financing activities. The funds will support the modernization of Bahia’s electricity distribution network, with focus on enhancing energy efficiency and improving the quality of supply in one of Brazil’s regions with great potential for socioeconomic growth.
This financing contributes to climate change mitigation efforts and aligns with the objectives of the 30th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP30), hosted by Brazil in November 2025 as part of cooperation efforts between the two countries. The agreement is also expected to further strengthen the longstanding relationship between Brazil and Japan, built over 130 years of partnership, while deepening their strategic partnership based on a long history of cooperation.
This project is also aligned with the MIDORI (Mission for Inclusive Development through Responsible Investment) Initiative (see below), launched at COP30, to promote JICA’s private sector investment in climate change space in Latin America.
Borrower
Neoenergia Coelba
Country (Target Areas)
Federative Republic of Brazil
Loan Amount
JPY 15,607,300,000
Project Name
Northeastern Clean Power Distribution Improvement Project
Project Purpose
The project aims to finance capital expenditures required to strengthen the power distribution network, while providing interest rate incentives linked to Neoenergia Coelba’s progress in digitalizing its system and increasing the participation of female electrical engineers in its operations.
Through these measures, the project seeks to reduce technical losses and improve energy efficiency, enhance the stability of electricity supply in the region where renewable energy is a key power source. In doing so, it will contribute to climate change mitigation while advancing gender equality and increasing the participation of women in the energy sector.
Project Component
The proceeds of the loan will support the strengthening of Neoenergia Coelba’s distribution network, as well as other strategic investments across the State of Bahia during 2026 and 2027.
Contribution to the SDGs
Goal 5 (Gender equality)
Goal 7 (Affordable and clean energy)
Goal 10 (Reduced inequalities)
Goal 13 (Climate action)
Goal 17 (Partnerships for the goals)
References
This project is the first case of JICA’s new Sustainability-Linked Loan (SLL) product. SLL is a type of loan that helps realize a more sustainable environment and society by adjusting loan conditions, such as interest rates, depending on whether the borrower has achieved pre-defined sustainability targets, thereby incentivizing continuous efforts by the borrower. In this project, the SLL targets are set on (i) digitalization of the distribution network and (ii) increasing the share of female electrical engineers. These targets are expected to promote more efficient distribution operations and advance gender equality in the field of electrical engineers where women are still underrepresented.
The project is also the first application of the Sustainable Finance Framework introduced in July 2025 for co-financing between MUFG Bank and JICA. The framework has received a second-party opinion from an independent external organization confirming its alignment with internationally recognized sustainable finance principles, including the Green Loan Principles and Social Loan Principles established by the Loan Market Association (LMA), the Loan Syndications and Trading Association (LSTA), and related bodies. Under the framework, when MUFG Bank and JICA jointly finance projects that address environmental and social challenges, such loans can be treated as green loans, social loans, or sustainability loans that are consistent with these sustainable finance principles.
Through the introduction of this framework, JICA will continue to strengthen its collaboration with MUFG Bank and accelerate the mobilization of private capital to support economic and social development in developing countries and regions.
(*) Sustainable finance refers to the use of funds with environmental, social, and governance (ESG) considerations, to address key challenges necessary for the realization of a sustainable economy and society.
(**) For example, the Green Loan Principles and Social Loan Principles established by the Loan Market Association (LMA), the Loan Syndications and Trading Association (LSTA), and related organizations.
MIDORI Initiative was launched at COP 30 in Brazil in November 2025 to promote JICA’s investment in the climate change space such as renewable energy, energy efficiency, environment, agriculture, biodiversity, water and sanitation, and waste management.
