Structuring bankable power projects to attract financings in Central America Investing in a Sustainable Future
Proparco, a DFI dedicated to Renewable energy in Latin America Investing in a Sustainable Future
PROPARCO AT A GLANCE PROPARCO S SHAREHOLDER BASE 57% ACTIVITY 26% BANKS & INTERMEDIATION INFRASTRUCTURE CORPORATE 1% 3% 13% 44 % 31 % 25 % FUNDS AND ETHICAL FOUNDATIONS CORPORATES INTERNATIONAL FINANCIAL INSTITUTONS FRENCH FINANCIAL INSTITUTONS AFD SECTORS Financial institutions Microfinance institutions Insurance and reinsurance Investment funds Energy Transport Telecommunications Mines Water and waste Agribusiness Health Education Tourism Industry KEY FIGURES IN 2012 77 facilities EUR 740m of commitments 13 regional offices 172 staff members 340 clients EUR 3,1bn portfolio PRODUCTS EQUITY EUR 1m to EUR 10m 4 to 10 years LOANS EUR 5m to EUR 100m 5 to 20 years GUARANTEES & OTHER SECURITIES 10 % 87 % 3 % EUR 5m to 100m 5 to 20 years In % of the total portfolio at 31 December 2011
FOCUS ON RENEWABLE ENERGY IMPACTS AND KEY FIGURES TOTAL COMMITMENTS IN PORTFOLIO 467MUSD I.E. 50% OF TOTAL ENERGY PORTFOLIO TOTAL INSTALLED CAPACITY IN THE PORTFOLIO 2,731 MW, I.E. 51% OF ENERGY PROJECTS CO2 EMISSIONS RÉDUCTION (*) 545,000 TONNES P.A. HYDRAULIC 2,110 MW SOLAR 90 MW WIND 423 MW GÉOTHERMAL 108 MW Contribution expected from projects financed and cofinanced by PROPARCO in 2012
PROPARCO IN LATIN AMERICA MEXICO, Eurus (2010) 35M$ senior debt to build a 250MW wind farm PANAMA, Bajo Frio (2011) 35M$ senior & subordinated facilities for the construction of a 58MW hydro power plant PANAMA, Hidrotenencias (2012) 10M equity participation to finance three run-of-river hydro power plants PERU, T-Solar (2011) 7,15M$ Mezzanine for the construction of two first photovoltaic power plants- 40MW GUATEMALA, Pantaleon (2009) Extension of sugar, bioethanol and electricity production capacity NICARAGUA, Eolonica (2012) 27M$ senior debt for the construction of a 44MW wind farm NICARAGUA, San Jacinto (2010) 25M$ senior debt for the extension of a geothermal power plant upto 72MW BRAZIL, Brennand (2011) 30M to build 150MW of small and medium-sized hydro power plants URUGUAY, Polesine (2013) Arranging of a 88,5M$ senior debt for the construction of a 50 MW wind farm
Critical Success Factors to make bankable power projects in Central America Investing in a Sustainable Future
1 - A COMPETITIVE ASSET FOR A LONG TERM PUBLIC COMMITMENT Public constraints/targets Growing demand, Large dependancy to expensive thermal/fuel power, Need for investments in transmission networks & offtakers creditworthiness improvement, Political risk perception still in the high range, Private investors opportunities Sound potential of hydro, geothermal, wind ressources, Implementation of volontary climate policies by the governments, ASSET COMPETITIVENESS IS KEY TO DEVELOP A LONG TERM WIN- WIN SOLUTION
2 - A DETAILED DEVELOPMENTAL PHASE Viable and medium term assessment study of production capacity on site Review of the regulatory environment (IPPs history, local security framework) Lands acquisition rights & involvement of local communities (international standards) Permits, licences, connexion and PPA agreement terms
3 STRONG TRACK RECORD OF THE PRIVATE SPONSORS GROUP TECHNICAL EXPERTISE Construction risk rightly adressed, Performance of asset secured, Successfull long term monitoring LOCAL EXPERIENCE FINANCIAL CREDITWORTHINESS Dayly negotiations with public institutions, Cultural adherence from local parties involved, Accurate monitoring of the project phases Equity investor Completion support
4 ACHIEVE A BALANCED RISK/REWARD STRUCTURE Parties commitment and return to be adequate with overall project risks: Technical parties (EPC contractor, equipment suppliers, O&M companies) remuneration: - to be paid according to performance milestones, - to include appropriate LDs based on Lenders Independant Engineer opinion (technologies, contractual terms) and termination terms, The Sponsors - Min 25-30% of project costs, including development costs, mezzanine - IRR(dividends, other potential revenues and exit strategy) The Lenders -Min 70/75% of project costs, -Sculpted debt repayment profile on Min DSCR / LLCR levels, -DSRA/MMRA, The Offtaker -Purchase power at pre-agreed tarif, ensure access to the grid, -Secure payment obligations to sponsors / Lenders (inc termination indemnities)
THANK YOU FOR YOUR ATTENTION EMMANUELLE MATZ INFRASTRUCTURE matze@proparco.fr Tel. + (33) 1 53 44 32 54 Investing in a Sustainable Future