GSM-GSA


Country Guatemala
Sector Energy
Signing Date May 19th, 2015
Total Project Cost $118.5M
ICF Debt Pool Exposure $15M
IFI Exposure $55M

Project Description

The project is involves the financing of two run-of-river hydroelectric generation projects, Generadora San Mateo S.A. – Pojom II (‘GSM”) and Generadora San Andres S.A. – Yalhuitz (“GSA”) which located in the northwest region of Guatemala along with an adjacent transmission line.

Financing Structure

Financing Structure comprised of US$ 25M from Central American Bank for Economic Integration; US$ 15M from Inter-American Investment Corporation and US$ 15m from the ICF-DP.

Infrastructure Component

The Project will also contribute vital electrical power infrastructure, reduce oil dependency and will support the development of the Guatemalan economy. It will have a direct impact of allowing electrification of an area with more than 30,000 people. Once the project is operational, ERH will devote 1.5% of revenue to build last-mile grids in order to facilitate the process of interconnection of the local communities. The project will provide at least 30.6MW of capacity to the grid, which represents an additional 1.4% to the 2,181MW available today. The power plant will also lead the way for distribution companies to connect the adjacent communities to the grid by setting up low-voltage outlets along the 32km power line that will link the project to the national grid.

Investment Rationale

Strong Project Rationale: Guatemala is power production capacity relies for 23% on diesel and Bunker oil generators that are inefficient, polluting and extremely costly to operate. 50% of installed capacity is hydro but in the dry season (Q2) expensive imports have been necessary. The Project which consists in two run of the river small hydro projects will provide 30MW in additional capacity.

Satisfactory Sponsors and Contractor: The main sponsor is a well-known and powerful industrial group. The Sponsors will provide adequate completion guarantees. The contractor is a local subsidiary of a well-known Israeli group and has extensive experience in hydro in the country and globally.

Development Impact

The greater availability of hydro power will help lower electricity costs for users. The Project will also contribute vital electrical power infrastructure, reduce oil dependency and will support the development of the Guatemalan economy. The projects will have a direct impact of allowing electrification of an area with more than 30,000 people.
Moreover, the power plants will lead the way for distribution companies to connect the adjacent communities to the grid by setting up low-voltage outlets along the 32km power line that will link the project to the national grid.

Additionality

Financing for this project was not available in the local market.