Support for Colombian private electricity sector expanded to US$50 million

CAF today approved the co-financing of a syndicated loan, with US$50 million exposure, with a select group of international financial institutions, whose objective is to finance acquisition of a hydroelectric plant for the private company Chivor SA, subsidiary of the Chilgener company of Chile, country which is also CAF shareholder.

Chivor was privatized in 1996 for US$643 million in a bidding process won by Chilgener through its subsidiary Energy Trade and Finance Corporation (ETF). Of this total, US$243 million was contributed by ETF and the remaining US$400 million by a syndicated loan led by Bank of America and co-led by CAF, together with 13 other financial institutions.

CAF President & CEO Enrique García – of Bolivian nationality – said the operation was concrete support by the Corporation for the structural reform process which the Colombian government is implementing in the electricity sector, as well as cooperation in the financing to acquire one of the country’s most important privatized assets.

He added that the financial operation had a substantial integrationist component because of its support for the energy sector – a vital area in the region – and because it stimulates investments in favor of two of its shareholders – one extraregional and the other Andean – which is evidence of the Corporation's capacity to mobilize funds between its members.

The companies The Chivor hydroelectric plant, which has a generating capacity of 1,000 MW, equivalent to 10% of Colombian electricity capacity, is located on the Lengupá River, 160 km northeast of Bogota, Boyacá Department, and is part of the National Interconnected System.

Chivor has been operating uninterruptedly for 20 years without environmental problems. The facilities have a remaining useful life of 23 years before being affected by sedimentation in the reservoir. In this respect, Chilgener has also budgeted a considerable amount to begin works over the next four years to extend its useful life.

Located close to one of the largest energy consumer markets in Colombia, the capital Bogota, the plant is part of the basic infrastructure of the country, which means the authorities have to guarantee the normal operation of the water feeds which supply power to the load centers.

Chilgener, the second largest electricity company in Chile, has been expanding its operations into other nations as part of its strategy to become one of the leading electricity generating utilities in South America.