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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26466 |
| Company name | Central Termoelectrica Andino |
| Country | Chile |
| Sector | Utilities |
| Environmental category | B |
| Department | Infrastructure |
| Status | Pending Signing |
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| Date SPI disclosed | February 1, 2008 |
| Projected board date | March 6, 2008 |
| Previous Events | Approved: March 13, 2008 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The proposed project consists of the construction and operation of 2x165MWe circulated fluidized bed (CFB) technology thermal power units in northern Chile to be fired by a combination of coal, petroleum coke, and biomass fuels. The project sponsor is Suez Energy Andino (project sponsor), a subsidiary of Suez S.A. (France). The first 165MWe unit (Unit 1) is to be developed by Central Termoeléctrica Andina S.A., (CTA), while the second 165MWe unit (Unit 2), with essentially the same characteristics, will be developed through a separate special purpose company. Both Unit 1 and 2 will be selling power to the spot market. To hedge the exposure against spot market volatility, Unit 1 already signed a 21-year financial contract or power purchase agreement (PPA) with Corporación Nacional del Cobre S.A. (Codelco), a Chilean state-owned copper mining company, for 150 MW capacity sales. Furthermore, with respect to Units 1 and 2, CTA entered into a turn-key contract with Cobra Instalaciones y Servicios S.A. (Cobra), a company of ACS S.A. (Spain). Notice to proceed to the EPC contractor for the construction of the first unit (165 MW) was issued on July 1, 2007 and for the second unit on December 31, 2007. The construction period is expected to take 33 months. With respect to Unit 2, the PPA arrangements are yet to be finalized. |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Suez Energy Andino (SEA) a wholly owned subsidiary of the Suez Group (France), a leading international multi-utility company, which owns and operates over 56,000 MW of generation capacity in the world. CTA and the other special purpose company for Unit 2 which are incorporated in Chile, are fully owned by SEA. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost for the two units is estimated at about $1 billion. The requested financing includes an A Loan for IFC’s own account of up to $150 million and a B loan of up to $590 million. |
| Location of project and description of site |
| The site is located in Mejillones – II Region of Chile, adjacent to the site of Empresa Eléctrica del Norte Grande S.A’s (EDELNOR) existing Units 1, 2 & 3, which are controlled by SEA. |
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| Anticipated development impact of the project |
In light of the recent gas disruptions from Argentina to Chile, the Chilean Government is emphasizing the diversification of the energy matrix, which includes the development of coal-fired power plants such as CTA and the other special purpose company for unit 2, in order to mitigate the impact of similar gas disruptions in the future. Following the gas disruption crisis from Argentina, a number of investment decisions to build new gas-fired power plants in Chile have been postponed due to uncertainty in gas availability and pricing. Further, the gas crisis has lead to an increase in the cost of electricity supply in Chile as it was necessary at times for thermal units to burn diesel oil instead of gas.
The project will help mitigate gas supply reliability issues in the Northern Interconnected System of Chile (SING), which supplies the northern zone of the country, and introduce the latest available CFB technology, thereby mitigating, to the extent possible, the impact of thermal coal power generation. |
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| IFC's expected development contribution |
| IFC’s participation is expected to provide to the sponsor and participating banks regulatory risk mitigation amid the ongoing energy crisis in Chile. IFC’s participation will also help reduce the syndication risk and facilitate the mobilization of a large B Loan component (up to $590 million). Finally, IFC’s participation will also ensure that the plant will have the flexibility to burn several fuels (including biomass) while meeting the World Bank environmental standards. |
| Environmental and social issues - Category B |
| The project is a category B investment according to IFC’s Environmental and Social Review Procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS) disclosed through IFC’s external website. |
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| For inquiries about the project, contact: |
Valérie Barnich
Suez Energy Andino S.A.
Senior Manager, Finance and Acquisitions, Investments and Financial Advisory
Av. Apoquindo, 3721 / Piso 8
Las Condes, Santiago
Chile
Telephone: 56 2 290-0418 (0400)
Fax: 56 2 290-0402
E-mail: valerie.barnich@suezenergy.cl |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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