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| PECSA |
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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 | 26751 |
| Company name | Peruana de Combustibles S.A. |
| Country | Peru |
| Sector | Chemicals |
| Environmental category | B |
| Department | Oil, Gas, Mining And Chemicals |
| Status | Pend FAP |
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| Date SPI disclosed | February 11, 2008 |
| Projected board date | March 14, 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 |
Peruana de Combustibles S.A. (PECSA or the company), established in 1994, is currently the fourth largest fuel distributor in Peru with sales above $700 million in 2006. The company has about 18% of the market share in liquid fuels wholesale, and is one of the main players in the retail market. In 2005, the company made a strategic acquisition of Texaco’s wholesale and retail fuel distribution operations in Peru which allowed PECSA to increase its presence in the market.
The project involves a corporate facility to be provided to PECSA to support its 2008-2009 funding needs of approximately $52 million.
The project aims at:
- supporting PECSA, a local medium-sized player, to expand its retail operations and logistics related facilities, consolidating into liquid fuels as well as expand into the distribution of less contaminating VNG and LPG used for car engine combustion and the related conversion of vehicles, thereby reducing the dependence of vehicles on more costly and polluting diesel and traditional liquid fuels;
- strengthening PECSA’s brand in order to benefit from potentially attractive VNG and LPG market growth with more profitable margins than those achieved in traditional liquid fuels distribution. |
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| Project sponsor and major shareholders of project company |
| PECSA is a private company controlled by a group of 38 investors. Its shareholder structure encompasses shares type A (38 shareholders) with voting rights representing 90% of total shares and shares type B (106 shareholders) with no voting rights representing 10% of total shares. The Board of Directors is composed by shareholders or related parties that concentrate 70% of total voting shares. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at $52 million, including capital expenditures, projects and refinancing of short/medium-term debt. The proposed IFC investment is up to $16 million A loan for IFC’s own account, up to $16 million syndicated B loan and up to $8 million equity/quasi-equity investment. |
| Location of project and description of site |
| The company is headquartered in Lima, Peru and its service stations, offices and other facilities are spread around the Peruvian territory. |
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| Anticipated development impact of the project |
- Increased Supply and Monetization of Natural Gas and Gas Liquids:
PECSA’s capital expenditure plan is targeted to increase the distribution of predominantly Peruvian indigenous sources of energy, particularly supply of monetized stranded natural gas reserves and gas liquids, as well as liquid fuels. Peru has modest reserves of liquid hydrocarbons but significant reserves of natural gas. The development and expansion of Peru’s LPG and VNG distribution will diversify combustion of conventional liquid fuels towards increased use of cleaner LPG and VNG while at the same time reducing the dependence on additional liquid fuel imports in Peru’s growing energy market. Given the significant capital requirements for expanding Peru’s energy distribution infrastructure, the private sector is expected to play a major role.
- Creation of Gas Markets:
The project will foster supply of clean consumer fuels and services to the nascent VNG and vehicular LPG markets which has environmental, energy matrix diversification, and other economic benefits.
- Creating Local Employment and Sourcing in Peru:
The growth of its retail stations including liquid fuels, VNG and LPG distribution, has positive local employment and sourcing effects in Peru, including indirectly through the affiliated service stations.
The key development indicators that are proposed to be monitored during the life of the IFC investment are:
- number of new service stations;
- direct and indirect employment generation;
- total value of local supply of goods and services;
- sales volume of VNG and LPG;
- reduction of pollutants per ton of VNG and LPG used by vehicles. |
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| IFC's expected development contribution |
The project fits well with the most recent World Bank Group Peru Country Partnership Strategy (CPS) discussed by the Board on December 19, 2006 (Report: 37913-PE). The CPS supports the new government’s priorities. It envisages a selective program of operations from IBRD and the IFC. The program is built upon three strategic pillars to support Peru’s efforts to increase economic growth and competitiveness, reduce poverty and inequality, and strengthen the country’s public institutions. More specifically, supporting private sector development, the IFC strategy focuses on:
(a) working to reduce Peru's large informal sector with technical assistance;
(b) investing and developing projects which address bottlenecks to provision of basic services and physical infrastructure;
(c) investing in industries with strong competitive advantages such as agribusiness and tourism;
(d) expanding growth to new beneficiaries by providing access to SME, housing, and tertiary education finance and by building local government capacity to deliver services; and
(e) supporting environmentally and socially sustainable growth, notably in extractive industries.
Specifically, the expected fit between the project and the CPS for Peru is evident in a number of areas.
In line with objective (e) above, the project will be developed in an environmentally and socially sustainable manner, i.e. with a minimal footprint during, both, construction and operations, adequately mitigated environmental impacts, and social benefits for the surrounding region.
In line with objectives (b) and (c), the project will enhance the country’s domestic hydrocarbon distribution capacity towards the transportation sector, in particular for clean natural gas and associated gas liquids.
IFC will contribute to the project in the following ways:
- Environmental and Social Standards:
IFC will review PECSA’s environmental and social practices and assist the company in enhancing these practices so that their operations comply with the best international environmental and social practices. IFC will help the company strengthen the operations of the affiliated service stations and of the contracted transportation which may not have the same level of sound practices as the company's own operations.
- Provision of long-term financing: IFC’s participation will provide a medium-sized local player with access to long-term debt financing which is otherwise not available from the market and will encourage the participation of other financial institutions through the syndicated B loan tranche or a parallel facility.
- Corporate Governance:
By supporting the company in implementing best corporate governance practices, IFC would be enhancing the company’s possibilities to go public and to have access to local and international capital markets. |
| Environmental and social issues - Category B |
This is a Category B project.
IFC's early review of this investment has identified the following key environmental, social, health, and safety issues (ESHS): ESHS management capability for the company owned and franchised operations, air emissions, liquid effluents, soil contamination, hazards materials transport, handling, storage, and disposal, emergency response, land acquisition, and employee and community health, safety and exposure to harmful chemicals and accidents.
The performance standards (PS) that are expected to be applicable for this project may therefore include:
- PS1: Social and Environmental Assessment and Management System
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement.
The company has basic environmental management structure and established procedures to handle the environmental, health and safety impacts of its operations. The company will further enhance its procedures to assess the impacts of its affiliated operations.
Based on the assessment conducted, the project has been provisionally categorized as a B. |
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| For inquiries about the project, contact: |
Mr. Alvaro Valdez, General Manager
Av. Republica de Panama, 3542 - San Isidro
Lima, Peru
E-mail: avaldez@pecsa.com.pe
Website: www.pecsa.com.pe
Telephone: 511-411-4600
Fax: 511-411-4600 |
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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 |
| Local access of project documentation |
The environmental documentation will be disclosed for a period of 30 days at the following country locations:
Municipalidad Centro Poblado Santa María de Huachipa
Address: Jirón Los Canarios Mz. 02 Lote 5, Urb. El Club, distrito de Lurigancho - Lima
Contact: María Angélica Fonseca Espinoza
Working hours: 08:00 to 13:00 hrs and 14:00 to 17:00 hrs
Peruana de Estaciones S.A.C. - Estación de Servicio "Las Gardenias"
Address: Calle Batalla de San Juan 112, Urb. Las Gardenias , distrito de Santiago de Surco - Lima
Contact: Julio Roca Cervantes / Operations Manager
Working hours: 08:00 to 13:00 hrs and 14:00 to 18:00 hrs
Peruana de Estaciones S.A.C. - Estación de Servicio "La Calera"
Address: Avenida Aviación 4524, distrito de Surquillo - Lima
Contact: Julio Roca Cervantes / Operations Manager
Working hours: 08:00 to 13:00 hrs and 14:00 to 18:00 hrs
Peruana de Combustibles S.A. - Oficina Regional Norte
Address: Av. Larco 770 dpto. 302, Urb. San Andrés, Trujillo
Contact: Carlos Cáceres Núñez / Regional Manager
Working hours: 08:00 to 13:00 hrs and 14:00 to 18:00 hrs
Peruana de Combustibles S.A. - Oficina Regional Sur
Address: Centro Comercial Cayma Oficina Nº46, Cayma, Arequipa
Contact: Marlene Medina Zegarra / Regional Manager
Working hours: 08:00 to 13:00 hrs and 14:00 to 18:00 hrs |
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