| Cheves Hydro |
| 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 | 29405 |
| Company name | Cheves |
| Country |
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| Sector1 | Large Hydro - Renewable Energy Generation |
| Environmental category | A |
| Department | Reg Ind, Infra & Nat Res, CAF/CLA |
| Status | Active |
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| Date SPI disclosed | October 1, 2010 |
| Projected board date | December 2, 2010 |
| Previous Events | Invested: March 5, 2012
Signed: December 15, 2010
Approved: December 7, 2010 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Empresa de Generación Eléctrica Cheves S.A. (“Cheves” or the “Company”) is developing a run-of-river 168 MW hydroelectric power generation plant, along the Churin and Checras rivers, approximately 245 km north of Lima, Peru (the “Project”). The Project is expected to generate 838 GWh annually on average, yielding a plant utilization factor of around 57%. The Project comprises the construction of a total of 18 km in tunnels (including a water conveyance system), an underground power house, and a 77 km transmission line to connect the project to the National Interconnected System.
The Project has been in development for over 10 years and Cheves has now secured all necessary key permits for its development, including a Definitive Concession (required for electric power generation activity), and performed the required Environmental & Social Assessments (“ESIA”s) in accordance with local regulation. The Company has also secured 8 Power Purchase Agreements (“PPA”s) with electricity distribution companies for a period of 15 years starting in 2014. |
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| Project sponsor and major shareholders of project company |
SN Power Invest AS (“SN Power” or the “Sponsor”) owns 99% of Cheves, a special purpose vehicle created to develop the Project.
SN Power is a Norwegian company dedicated to invest, develop and operate renewable energy projects (mainly hydropower projects) in emerging markets. It was established in 2002 and is owned by Statkraft (currently 60%), Norway's public power utility and Europe’s largest generator of renewable energy; and Norfund (currently 40%), a leading Norwegian risk capital investor in emerging markets that is funded by the Norwegian Government. The Company’s operations are currently focused in South America and Asia, with recent increased focus in Central America and Africa. |
| Total project cost and amount and nature of IFC's investment |
| The Project’s cost is estimated at around $400 million. IFC is expected to provide up to $100 million between senior and subordinated loans, and to mobilize up to $200 million through its B loan program. |
| IFC investment as approved by Board |
| 85 million (USD) |
| Product Line | IFC Investment (million USD) |
| Risk Management | |
| Guarantee | |
| Loan | 85 |
| Equity | |
* These investment figures are indicative |
| Location of project and description of site |
| The project is located along the rivers Churin and Checras, in the provinces of Huaura and Oyón in the central Peruvian Andes, approximately 245 km north of the city of Lima. |
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| Anticipated development impact of the project |
| The Project's success is critical in supporting the Government of Peru's efforts to refocus on developing Peru's hydro potential to sustain continuous economic growth through a properly diversified energy mix and address the climate change agenda. Furthermore, the Project is expected to have other key economic and developmental impacts by: (i) decreasing carbon emissions through the displacement of thermal power generation; (ii) increasing employment, mainly during the construction phase; (iii) contributing royalties and tax payments that will directly benefit the regional and local governments around the project; and (iv) serving as a benchmark in terms of implementation of E&S standards for other hydroelectric developments in the region. |
| IFC's expected development contribution |
| IFC would provide a substantial component of the much needed long term financing for the Project under otherwise difficult international financing environments, including the mobilization of a B Loan and potentially subordinated loans. Additionally, IFC is leading and coordinating with the Company, the Sponsor, and co-lenders the Environmental & Social ("E&S") due diligence efforts so as to ensure commitment to development and operation of the Project in accordance with IFC's Performance Standards on Social and Environmental Sustainability. |
| Environmental and social issues - Category A |
| Involving the construction of three moderately-sized dams connected by 18 km of tunnels in an undeveloped area, this category A project generates some potential adverse impacts. These include: those associated with any large construction project of this type; changes in river hydrology within the Project’s footprint; the acquisition of approximately 90.5 ha of land, most of which is owned by Rural Andean Communities (RACs); and potential impacts on physical cultural heritage. |
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| For inquiries about the project, contact: |
Contact: Kjetil Nevstad
Address: Camino Real 456 7th Floor, San Isidro, Lima-Perú
Phone: +51-1-7008100 Extension 7123
E-mail: Kjetil.nevstad@snpower.com
Website: www.snpower.com.pe (available from 2011) |
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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 |
Churín:
Cheves S.A. – Churín Public Information Center
Mariscal Castilla 175, Churín-Pachangara
Lima:
Cheves S.A. Offices
Camino Real 456 7th Floor, San Isidro
Phone: 7008100 Extension 7123
Website: www.snpower.com.pe (available from 2011) |
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