Uruguay - Insurance against lack of rain and oil prices
Thursday, 01 11 2018, Category: Insurance and Reinsurance, Country: World
Uruguay is vulnerable to climate and fluctuation of commodity prices, in particular oil price volatility. More than 80% of the country’s electric power is hydraulic, so when the lack of rainfall lowers the volume of water in reservoirs, the Uruguayan state-owned hydro-electric power company must turn to thermal generation, which has a higher cost and requires oil purchases.
Additionally, when the price of oil is high, these generation costs increase and create a financial burden for consumers.
In December 2013, looking for practical solutions to these complex financial problems, the World Bank announced the execution of a US$450 million weather and oil price insurance transaction for the Uruguayan hydro-electric power company.
Source: World Bank