IFC publishes details for Ram Power’s San Jacinto project in Nicaragua

San Jacinto plant, Nicaragua (source: Polaris Geothermal)
Alexander Richter 29 May 2010

The International Finance Corp. (IFC) is evaluating an investment of US$60 million into the San Jacinto project of Polaris Geothermal/ Ram Power in Nicaragua. This includes a US$40 million senior debt part and a US$20 million equity/ quasi-equity investment.

The International Finance Corp., a member of the World Bank Group, is – as the largest multilateral source of loan and equity financing for private sector projects – a very important provider for much needed financing for renewable energy projects in the developing world and in emerging markets.

The IFC has over the years financed a large number of renewable projects, among them geothermal projects.

The company is now evaluating an investment of up to US$60 million (US$ 40 million for senior debt, and US$20 million in equity/ quasi-equity) into Phase II of the San Jacinto project by Polaris Geothermal, a subsidiary of Ram Power, in Nicaragua to be put in front of its Board.

Details about the project and the potential involvement of IFC can be found here.

Here some details published on IFC’s website:

“Polaris Energy Nicaragua S.A. (“PENSA”, or the “Company”) owns the San Jacinto-Tizate geothermal concession covering a 40 km2 area near León, Nicaragua, that is estimated to have a geothermal resource of more than 200 MW capacity. Since 2005, under the concession, PENSA has owned and operated 10MW generation capacity comprised of 2 x 5MW back-pressure turbines (“B/P units”).

The Company is in the process of expanding its operations by adding another 72MW of capacity through 2 x 36MW Fuji flash turbines supported by further steam resource development, after which the original less efficient B/P units will be decommissioned (the “Project”). As is often the case with integrated (comprising both steam field and power plant) geothermal power plants, financing for the Project is being divided into phases to match the ramp up of geothermal development and the progress of construction. For this project, financing for the Project is being divided in Phase I and Phase II that each correspond to 36MW addition of capacity to the Company’s operations. IFC has been asked to consider providing financing for Phase II.

The Project will utilize geothermal resources from a smaller area within the larger concession (“Eastern Sector”), which has been in development since the 1950s by various parties and is estimated to contain a geothermal resource sufficient for the Project. The Company has been and will continue to sell its output to two utilities, both of which are subsidiaries of Union Fenosa, a large Spanish utility, under power purchase agreements (“PPAs”) whose term end in 2029. The Company has deployed a group of the world’s leading contractors/suppliers to complement its own substantial in-house geothermal expertise: ThermaSource of the US in drilling, Construtora Queiroz Galvao of Brazil in construction, and Fuji Electric of Japan in turbine supply.”

Total project cost and amount/ nature of IFC’s investment is described as follows: “The total cost of the Project (Phase I and Phase II) is $309 million, of which $157 million is for Phase II. IFC has been asked to consider investment in Phase II of: (i) up to $40 million senior secured debt in PENSA for Phase II of the Project, and (ii) up to $20 million investment in equity/quasi-equity in PGI to be applied to construction costs of Phase II, both for IFC’s own account.”

Source: IFC