An additional $40-million loan to state-owned Development Bank of the Philippines (DBP) has been approved by the World Bank to provide electricity to poor households in the country's rural areas.

The loan will be used for the Rural Power Project (RPP), which aims to reduce poverty and improve the quality of life of some 10,000 households in the poorest areas in the Philippines, particularly in Mindanao.

"Rural electricity provides more opportunities for countryside entrepreneurship, thus expanding economic activities in these areas," World Bank country director Bert Hofman said in a statement.

The new amount will be on top of the $10-million loan extended by the multilateral lender to DBP, and the Energy Department's $9-million grant from the Global Environmental Facility.

Both were part of the RPP Adaptable Program Loan signed by the World Bank and the DBP in 2003.

According to DBP president and chief executive officer Reynaldo David, the government had to request additional financing from the World Bank since the earlier $10-billion loan had been fully committed by the state-owned bank a year ahead of schedule.

David explained that the initial loan has provided electrical connection to at least 10,000 households in rural areas, attracted seven more renewable energy technology suppliers, and avoided some 11,466 tons of carbon dioxide which can cause climate change.

"The additional financing will enable the DBP and the energy sector to further expand public-private partnership in the provision of energy access, particularly in Mindanao where over 50 percent of the scaled-up projects will take place," he said.

For his part, Energy Secretary Angelo Reyes said the new $40-million loan would further enhance development impact, particularly in power-constrained areas such as Mindanao.

"All these projects will contribute towards the global objective of mitigating climate change caused by greenhouse gas emissions through wider use of clean, renewable energy technologies in power generation," Reyes noted.