The Japan Bank for International Cooperation (JBIC) has signed a loan agreement totaling US$195mn with Compa de Generaci Valladolid (CGV), a Mexican company in which Mitsui & Co, Chubu Electric Power Co and Calpine Corporation have stakes.
The loan is co-financed by Mizuho Corporate Bank (the lead bank), Sumitomo-Mitsui Banking Corporation (SMBC) and Standard Chartered Bank (Tokyo branch). JBIC also provided a guarantee covering political risk for the co-financed portion.
The loan provides funds on a long-term project financing basis for constructing and operating a natural gas-fired combined-cycle power plant with a capacity of 525MW, as well as for the sale of electricity generated there to the Comisi‘ Federal de Electricidad (CFE).
Power demand in Mexico is forecast to grow at 5.6% annually up to 2013, reflecting the country’s robust economic outlook. It is estimated that the national power generation capacity must be increased by 50% – from 44,554 MW in 2003 to 65,383 MW by 2013. To this end, the Mexican government has been actively promoting independent power producer (IPP) projects since the Electricity Law was amended in 1992, to encourage the construction of new power plants without incurring additional external debt.
In accordance with this policy, the project is to be undertaken as a BOO (build, own and operate) scheme.
Japanese firms view the growing Mexican power market as a promising investment destination, and this is the sixth IPP project in Mexico to be financed by JBIC. It is the first Mexican IPP project undertaken by Mitsui & Co and Chubu Electric Power Co, and is also the first such scheme in the Americas for the latter company, which is increasing its participation in overseas power projects.