The Andean development corporation CAF is considering investment in a new gas pipeline between Bolivia and Argentina.
Existing pipeline capacity between the two countries is too small for future demand. As in other Bolivian export projects, state oil company YPFB would aggregate gas production from Bolivian producers and be the exporter of record, while on the Argentine side, transport company TGN would buy the gas.
The project is one of a number of possibilities for CAF activity in Bolivia. Despite delays, the CAF still intends to be the investment bank for a government tender for a company to make 230,000 residential gas connections, and there are a number of other downstream and petrochemical projects on the table, CAF vice-president of corporate financing and investment banking, Peter Vonk, says.
“We’re looking actively at these projects to get involved one way or another. It could be through lending or investing, or a combination of the two,” he says.
The gas distribution project has been stymied by political uncertainty, but once the country holds its referendum on the gas issue and the hydrocarbons law makes its way through congress, “I’m pretty certain we’ll get back on track again,” Vonk adds.
Bolivia is one of the countries the CAF feels it can most make a difference, Vonk says. Come what may, sovereign recipients of CAF financing do not default, and the CAF consequently rates the governments of member countries at AAA, while other financial institutions rate them lower.
Therefore, when the CAF with its own high credit ratings steps in as a financial mediator, it brings comfort to the international investor. This allows regional governments and companies to access the better terms of a wider financial market through the security offered by CAF involvement in their projects.
“In order to attract foreign capital we are willing to invest together with the foreign capital and we are willing to extend our umbrella of immunity and privileges to other investors in order to bring them to the table,” Vonk adds. “People feel a lot of comfort from the presence of CAF in particular transactions.”
Elsewhere in the Latin American energy sector, the CAF is working on projects with Ecuador’s state oil company Petroecuador to help it raise money to partner private companies in projects to increase oil production. In Colombia it has structured an A/B loan structure for a gas pipeline company.
Recently approved deals include US$30mn lending already disbursed to Costa Rican oil refiner Recope for a pipeline project and a US$50mn loan expected to be disbursed to Peru’s Camisea project. A “significant” loan to Venezuelan power generator Edeca for the 2,160MW Tocoma hydro project is still in consideration.
In Colombia, the CAF is in the due diligence stage of a US$23.7mn loan to state transmission company ISA. In Venezuelan power transmission, it approved last December a US$100mn loan to Edelca for projects to be carried out over the next five years.