|Country||Republic of Peru|
|Signing Date||April 16th, 2010|
|Total Project Cost||$236M|
|ICF Debt Pool Exposure||$35M|
Gas Natural de Lima y Callao S.A. ("Calidda") is the holder of a 33 year concession (extendable to a maximum of 60 years) granted by the Government of Peru (“GOP”) to build and operate the gas distribution network in Lima and Callao. The Company started operations in 2004. The purpose of this financing was to fund Calidda’s expansion over 2009-2011. Designated as Phase I of the 5-year investment plan (2009-2013), this phase is designed to increase the distribution capacity from 255 to 420 million cubic feet per day (MCF/D).
Total loan amount was USD 135 million including USD35 million in senior debt from the ICF Debt Pool and USD100 million in loans from International Finance Corporation (IFC) and Corporación Andina de Fomento (CAF)
Proceeds from the loan were used to fund the construction of a 38 km high pressure pipeline in Calidda’s primary distribution grid; and the construction of low pressure pipelines in Calidda’s secondary distribution grid.
Compelling market opportunity: With natural gas markedly cheaper than alternative fuels, Calidda saw strong demand grow between 2005 and 2008. While the growth rate is expected to moderate significantly in future years as the penetration rate increases, the market outlook for natural gas appears quite favorable.
Proven Operator: Calidda has an excellent track record as an owner, builder and operator of gas distribution networks. Financial condition is sound and conservative.
Experienced Sponsors: Calidda is owned by sponsors with extensive experience in the natural gas industry.
Supportive environment: Government has put in place a stable and transparent regulatory framework providing for a fixed return on investment.
The project is expected to benefit energy intensive industries, CNG stations and residential households of Lima and Callao. Between 2009 and 2013, Calidda is expected to add six new residential districts to its current network, including Villa Maria del Triunfo, San Juan de Miraflores, San Martin de Porres, Puente Piedra, San Vicente de Canete and Imperial (Canete). The total population of the affected districts amounts to approximately 1.8 million people. This project is also expected to result in an overall improvement of the air quality in its area of influence, and the reduction of climate footprint of Lima and El Callao’s energy use, as it will substitute the use of more polluting fuels such as fuel oil, coal, diesel and gasoline, in industry, businesses and homes.
At the time of funding, there was little appetite from banks and/or the capital markets for long dated debt. There was also only modest appetite for construction risk.