IIC Approves Loan For Renewable Energy Project In Chile
10/06/2008With this operation, the IIC will support an increase in the electricity supplied to Chile’s central power system
Washington D.C. - On October 7, 2008, the Inter-American Investment Corporation (IIC) approved a loan of up to US$28,585,000 to Energía Pacífico S.A. The operation consists of a loan of up to US$8 million to be financed by the IIC and a syndicated loan of up to US$20.6 million to be provided by participating financial institutions. Energía Pacífico was established to carry out a biomass power cogeneration project.
The plant will be located in San Francisco de Mostazal, in Chile's Region VI, 63 kilometers south of Santiago. It will have an installed capacity of 15.6 MW and generate 131.5 GWh of clean energy and 297,500 tons of steam per year.
Investments of this type are crucial. Chile was affected by a long drought in the first half of 2008 and the nation’s burgeoning domestic demand has met an inelastic response in terms of electricity generation supply. Chile depends on fossil fuels that it does not produce.
With this operation, the IIC is providing financing on appropriate terms in line with the project's cash generation profile. These terms are not available in the local financial system. The operation demonstrates the viability of private sector investment in small, renewable power generation projects in Latin America.
Technical assistance funds from the Korea-IIC SME Development Trust Fund have been used to structure this operation and finance the validation of the biomass logistics model, a Chilean power market study, and supervision costs incurred in project implementation.
Energía Pacífico is expected to benefit from the sale of carbon credits. To this end, the IIC has been working with the IDB’s Sustainable Energy and Climate Change Initiative to offer technical assistance to the project sponsor for obtaining greenhouse gas reduction certification and carbon credits under the Clean Development Mechanism established by the Kyoto Protocol of the United Nations Framework Convention on Climate Change.
The Inter-American Investment Corporation is a multilateral financial institution that is a member of the Inter-American Development Bank (IDB) Group. It provides financing (in the form of equity investments, loans, guarantees, and other instruments) and advisory services to private enterprises in Latin America and the Caribbean. In 2007, the IIC reached US$1.2 billion in assets and approved 62 transactions channeling US$470 million to SMEs in the region. The IIC’s mission is to promote the economic development of its regional member countries by encouraging the establishment, expansion, and modernization of private enterprises, particularly those that are small and medium in size. For more information on the IIC’s activities, please visit www.iic.int.
Contact: Jorge Ciurlizza (in Washington, D.C.)
Telephone: (202) 623-3932