iic - peru capital projects & infrastructure summit

7/27/2019 IIC - Peru Capital Projects & Infrastructure Summit

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Inter-American Investment

Corporation

Transferring Risk in Infrastructure Projects -

A Lenders Perspective

August 2013

www.iic.org


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Who We Are:

Part of the IDB Group

44 member countries and a presence in 11 countries in the region.

Total assets of US$1.8 billion

What We Offer:

Financing for SMEs, Corporates and Greenfield Infrastructure and Power Projects:

Direct loans and equity investments

Project finance for small infrastructure

Technical assistance

IIC Over 20 years of Lending and Investment Experience in LAC

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Regional Presence in 11 Countries

Mexico and Central America:Costa Rica

El Salvador

Guatemala

Nicaragua

Panama

Andean Region:

Colombia

Peru

Southern Cone Region:

ArgentinaChile

Paraguay

Uruguay

Caribbean:

Haiti

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Extensive local presence and local markets knowledge

Multiple financial solutions

Loan products / equity / partial credit guarantees

Specialized technical advisory services

Technical assistance (pre/post investment)

Proven financial soundness

Low debt to net worth ratio and high liquidity

Prudent loan portfolio management / adequate coverage

Strong commitment from 44 member countries

Agency ratings:

Fitch: AAA, Outlook Stable

S&P: Raised long-term rating to AA (07/2010), OutlookStable

Moodys: Aa2, Outlook Stable

Our Competitive Advantage

Local Presence

Project Finance

Expertise

FinancialSoundness

AAA/StableRisk Rating

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EPC Contract

EPC Contractor

Social Risks

Currency Exchange

Construction and Erection All Risk Acts of God Strikes, civil commotion Terrorism, sabotage Marine Cargo

Advance Loss of Profit ALOP

Third party Liability Workers compensation Employers liability Commercial general liability Pollution Liability

Project Construction Completion Risk

EPC Contract Fixed completion date / price DLDs to cover all loss or damage

suffered due to delays Securities:

Performance Bonds Advance PMT guarantee

Wrap-around guarantee (in case ofSplit EPC Contract)

Look closely: Change order provisions Definition offorce majeure

Include contingency and escalationamounts in original cost estimates

EPC Contractor Parent company guarantee

Social Risks Involve community early in the process

Currency Exchange Hedge mechanisms

Delays / Costs Overruns Possible Risk Mitigations

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Insurable Risks


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Technology Assurance Prefer tried and tested technologies

Equipment Performance PLD payable by contractor if it fails to

meet performance guarantee Securities:

Performance Bonds O&M Agreement linked to performance

Input Availability Supply contracts specifying quantity,

quality and pricing Match term of supply contract to term of

project life.

Management Performance

Experienced management team Performance Incentives and Penalties

Skilled Labor - Operator Performance Training provided by equipment supplier

Risks and Mitigation Arrangements during Operating Phase

Demand Potential Independent market assessment Offtake contract with minimum quantity

and prices

Payment Risk Sell output to creditworthy buyers

Consider credit enhancements if not: Government guarantees Direct assignment of part of

buyers revenue stream SBLC

Project Performance Market Risk

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Interest Rates Fixed-rate financing Interest rate swaps

Exchange Rates Offtake agreement indexed Match currency of project loan to project

revenues Swaps

Inflation Long-term supply contract Output price indexed to inflation /

commodity price

Political Risk Political risk insurance

Involve multilateral development bank orother official agency in financing.

Risks and Mitigation Arrangements during Operating Phase (cont.)

Operational property damage andmachinery breakdown Acts of God Strike Civil commotion, terrorism

Loss of Income during Business

Interruption

Economic and Political Risks Insurable Risks

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IIC Examples of Recent Projects Latin America

Carifresh S.A.In 2011, the IIC approved a structured loan for up to $10.5 million

to finance the construction and operation of the Hidroelctrica San

Lorenzo power plant, designed to generate 42.3 GWh of power a

year from a renewable energy source beginning in 2013 - enoughto power a town of 45,000 inhabitants. Hidroelctrica San

Lorenzo's two generators will reduce current carbon emissions by

approximately 20,000 tons per year.

In 2010, Coriport built a new international passenger terminal at Province

Guanacaste in Costa Rica. Coriport is headed up by Houston Airport

System, the worlds sixth-largest airport operator. The IIC provided US$7-

95 million in project financing, out of a total cost of US$43.5 million.

The IIC has long-standing ties to the tourism industry in Costa Rica. Ten

years ago, it financed construction of the first 5-star hotel in Guanacaste.

Hidroelctrica San Lorenzo

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http://www.google.com/url?sa=i&source=images&cd=&cad=rja&docid=w1b08n8pCFhB1M&tbnid=FDYJcp-S7gBt1M:&ved=0CAgQjRwwADhk&url=http://lenteckhartproperties.com/costa-rica/costa-rica-news/liberia-airport-expansion-almost-complete&ei=0q4LUruoO-v94APGnICACA&psig=AFQjCNH4JY7x4PUCmRkBkh3HZ58zw4VdEQ&ust=1376583763012347


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Empresa de Generacin Elctrica Canchayllo S.A.C

In 2012, the IIC approved a loan of up to US$7.2

million to finance the development, construction,and operation an hydroelectric plant along thePachacayo River, in the department of Junn,located in central Peru.

The project itself is a 5.3 MW run of river powerplant awarded with a Subasta RenewableEnergy Resources ("RER") power purchase

agreement at US $47.4 per MWh

Canchayllo is owned by Cascade Hydro Limited("Cascade"), Rurelec's 70% owned Peruvianpower generation company..


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Mountain Lodges of Peru S.A.C

In 2013, the IIC and Mountain Lodges of Peru,S.A.C (MLP) signed a loan agreement forUS$3.0 million. The loan proceeds will be usedto build mountain lodges for adventure tourism,benefiting communities of the Sacred Valley ofthe Incas, located in Perus Cusco Region.

With this loan the IIC is helping establish a newcultural route to Machu Picchu, along which a

series of small mountain lodges will be built.

The project will benefit rural communitieslocated along the route and help them form jointventures to share in the profits of the lodges.Considering the projects need for services and

labor, it will no doubt be a significant driver oflocal economic activity


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Margarita Garca de Paredes([email protected])Tel: + (202) 623-3932

iic - peru capital projects & infrastructure summit

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