project & infrastructure finance awards
SPONSORS: Invenergy Investment Co. and Grupo Calleja, VC Energy de Centroamerica and Quantum Energy
LOCATION: Port of Acajutla, El Salvador
FINANCING TYPE & SIZE: $856.5 million project finance loans
BANKS: Inter-American Development Bank, IDB Invest, KfW-IPEX, U.S. International Development Finance Corporation, International Finance Corporation, Finnvera
LAW FIRMS: Arias Law Firm, Mayer Brown, Norton Rose Fulbright, Romero Pineda, White & Case
SUPPORT: Sargent & Lundy (independent engineers); Astris (sponsor’s financial advisor)
The closing of the funding for Energía del Pacífico’s liquified natural gas (LNG)-to-power project just before Christmas, represents an historic milestone for the relatively poor Central American nation. The $856.5 million project finance loans will help El Salvador improve its energy production to support the public and industry alike, reduce air pollutants and may even turn out to be a revenue generator.
This first of its kind project for El Salvador also represents the largest private sector investment in the country. True, it was backed by multilaterals at the International Finance Corporation, Inter-American Development Bank and IDB Invest, the US International Development Finance Corporation, and Finland’s Finnvera.
The project is made up of a 378 MW natural gas-fired power plant, a floating storage regasification unit and a 44 km electric transmission line that will connect to the Central American Electrical Interconnection System (SEIPAC). It might even allow El Salvador to export power through SEIPAC. It will displace dirtier forms of fuel to generate power when construction, expected to be completed after two years in late 2021.
EDP will generate enough energy to supply 30% of the country’s demand, while helping diversify its energy supply from diesel or bunker fuel.
One important feature of this new project is the technical design that the sponsors hope will increase efficiencies. EDP will be able to quickly adjust output to meet supply/demand imbalances which will support a faster expansion of renewable solar and wind generation. The EDP project ties into another strong nomination for this category related to the financing for the Ventus Wind Farm. Ventus was nominated by Banca de Inversion Bancolombia.
The EDP project will have for the first time in El Salvador a Corporate Social Responsibility plan, based on the IFC’s social and environmental sustainability standards.
The participation of the IDB allowed the financing to have an 18 year tenor, a time frame not available in the commercial market.
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com