21315 - La Higuera

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Summary of Proposed Investment

Project Number

21315

Company Name

Hidroelectrica La Higuera S.A.

Date SPI Disclosed

Dec 22, 2004

Country

Chile

Industry

Infrastructure

Projected Board Date

Mar 3, 2005

Status

Completed

Sector

Large Hydro - Renewable Energy Generation

Department

Regional Industry INF LAC & EUR

Environmental Category

A - Significant

Previous Events

Approved : Mar 30, 2005
Signed : Nov 2, 2005
Invested : May 25, 2007

Project Description

Hidroelectrica La Higuera (HLH or the project) is a 50:50 joint venture formed in May 2004 by Pacific Hydro Limited (PHL) and Statkraft Norfund Power Invest AS (SNPI), collectively, the sponsors.

HLH will build, own and operate a 155 MW run-of-the-river hydro power plant located in the Tinguiririca Valley east of the city of San Fernando. The project diverts the Tinguiririca River and its major tributary Azufre just upstream of their confluence. At a gross head of 367 meters and a design flow of 50 m3/s, the installed capacity is 155 MW in two generating units equipped with vertical Francis turbines in a surface powerhouse. Firm capacity is estimated at 128 MW and average annual energy production at about 840 GWh. A 38 km long transmission line will be built to connect with Chile’s central grid at San Fernando.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	45.0
Equity	0.0

Development Impact

This is an environmental and social review category A project. The following aspects of the project were analyzed: public consultation and disclosure, development impact of the project, impact of the project on climate change, water rights and uses (including cumulative and downstream impacts), population/land use, impact of the project on recreation, management of quarries and tunnel spoil disposal, and consistency with IFC's policies on involuntary resettlement, safety of dams, international waterways, natural habitats, and cultural property.

Location of environmental documents In locally affected community
Environmental documentation will be made available at the following locations:

- Oficinas CONAMA, Región Metropolitana, Teatinos 254, Santiago Centro, Chile
- Oficinas COREMA, VI Región, Rancagua, Hermano Claudio 364, Rancagua. Chile
- Oficinas Municipalidad, San Fernando, Carampange 845, San Fernando, Chile
- Hostería "Casa Piedra", Puente Negro, Camino Internacional Puente Negro S/N, Chile

For more information, please visit: www.pacifichydro.com.au/Chile/Environment; www.hlh.cl.

The project will contribute to the expansion of cost-effective hydroelectric generation capacity to support electricity demand growth in the Central Interconnected System of Chile (SIC). As the project’s water inflows are primarily determined by snow and glacier melting, La Higuera’s hydrology is not closely correlated with that of the system. Hence, it is expected La Higuera will be available to dispatch at full load from November through March during the dry season, when the hydrology in the system is below average and the cost of generation tends to be higher (as increasing costly units are dispatched in merit order).

In addition, the project will generate significant direct and indirect employment in the project area. It is expected that about 500-600 local jobs will be created directly in connection with the construction of the project. Also, the project will contribute to reduce greenhouse gas emissions as well as emissions of local pollutants by displacing electricity, particularly during the dry season, that would otherwise have been generated by thermal plants.

IFC, by supporting the project, is therefore playing a key role in ensuring additional power capacity is built in Chile that will help meet the country’s future power demand growth, without being affected by external events such as the recent gas disruption from Argentina to Chile. In addition, given hydropower projects are generally capital intensive and as a consequence are in need of long-term debt financing, IFC has an important role to play in this transaction in providing 15-year A and C loans and mobilizing a B Loan with up to 13 years in maturity.

Contacts

For Inquiries About the Project, Contact

Mr. Mike Brown, Project Development Manager
PACIFIC HYDRO LIMITED
Edificio del Pacifico
Andres Bello 2687- Piso 18,
Las Condes, Santiago, Chile
Telephone:(+56 2) 754 1000
Fax: (+56 2) 946 1626

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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