The Inter-American Investment Corporation (IIC) has approved a $56 million financing package for a 500kV transmission line between the cities of Melo and Tacuarembó, a project will expand the electricity network enabling the integration of renewable energy into the grid.

The project represents the first public-private partnership (PPP) for transmission assets in the country. Italy’s Terna SpA will design, construct and supply the project to UTE, Uruguay's state-run electric utility, which will use and maintain the line under an operating lease agreement.

The project seeks to strengthen the reliability of the Uruguayan electricity system by accommodating the country’s recent massive shift towards non-conventional renewable energy. The 213km transmission line will represent approximately 5% of today's total transmission network.

The financing package is comprised of an IDB/IIC loan of $38.1 million and a co-loan of $17.9 million from the China Co-financing Fund for Latin America and the Caribbean.