25783 - Basic Energy II

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Summary of Proposed Investment

Project Number

25783

Company Name

Consorcio Energetico Punta Cana Macao, S.A.

Date SPI Disclosed

May 1, 2007

Country

Dominican Republic

Industry

Infrastructure

Projected Board Date

May 31, 2007

Status

Completed

Sector

Electric Power Transmission

Department

Gbl Infrastructure & Natural Resources

Environmental Category

B - Limited

Previous Events

Approved : Jun 20, 2007
Signed : Jun 28, 2007
Invested : Sep 19, 2008

Project Description

Consorcio Energetico Punta Cana Macao (CEPM), an existing IFC client, and its wholly-owned subsidiary, Compania Electricidad Bayahibe (CEB), are off-grid, vertically integrated utilities. They serve resort hotels and their surrounding communities along the eastern and south-eastern shores respectively in the Dominican Republic. The companies have thus far generated all of their electricity requirements from their own generation facilities. However, in order to meet accelerated growth in peak demand, the companies plan to interconnect to a power plant of their sister company, EGE Haina, to benefit from its more cost-competitive electricity. EGE Haina is the largest generator in the country, which is majority owned and controlled by the sponsors of CEPM.

The proposed IFC investment, a corporate loan of $20 million to CEPM and CEB, will finance part of the construction of a 129 km transmission line with 100MW capacity, including three sub-stations. The transmission line will be off-grid and dedicated to transfer electricity from the EGE Haina power plant in San Pedro Macoris through CEB in Bayahibe to CEPM in Punta Cana. Total project costs are estimated at $35 million. ELECNOR of Spain will construct the transmission line, while ABB from Switzerland will be responsible for the substations. The construction period is expected to be 18 months. CEPM has secured approvals for the project from CDEEE, the state-owned electricity utility. The borrowers will purchase electricity from the EGE Haina under a power purchase agreement.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity

Development Impact

The proposed IFC investment will continue fostering the tourism sector, which depends critically on reliable electricity supply. The tourism sector is one of the country''s largest foreign exchange earners and provides much-needed local employment. Approximately 85% of CEPM''s electricity sales are to hotel clients in the tourism zones of Punta Cana and Bayahibe. CEPM is delivering reliable power, while the national grid remains unreliable. The only alternative for these hotels is self-generation, which is a significantly costlier alternative. Furthermore, the availability of reliable electricity supply in CEPM’s and CEB’s franchise areas has facilitated residential and commercial development in these areas, which were originally exclusively for resort hotel development.

The project will utilize the existing generation capacity of EGE Haina in lieu of the construction of greenfield generation facilities at CEPM and CEB. From a view point of the electricity sector as a whole, this results in economic savings, as it improves the utilization rate of the sector’s existing generation capacity.

IFC has worked closely with the company to facilitate its growth in recent years. The company’s wind power project, which IFC committed to financing in previous years, was the country’s first wind project.

The country’s business environment particularly in the electricity sector remains difficult due to its weak legal foundations and policy inconsistencies. Through our local presence, IFC has actively supported the company in managing such issues and achieving critical milestones in the implementation of the wind project. IFC has also provided support and guidance to the company to strengthen its administrative capacity to deal with international lending institutions.

The proposed IFC investment is a continuation of this strong on-going relationship with the company and will continue to support infrastructure development to bolster the country''s tourism sector, which is a key sector for the country’s economic development.

This is a Category B project because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. CEPM will manage its environmental and social performance in accordance with applicable Dominican laws and regulations and international standards, including the applicable IFC Performance Standards on Social and Environmental Sustainability.

Contacts

For Inquiries About the Project, Contact

Tito Sanjurjo, Gerente General
Consorcio Energetico Punta Cana Macao S.A.
Av. Abraham Lincoln esq. J. F. Kennedy, Edificio Ambar, 5ta. Planta,
Post Office Box 4052, Santo Domingo
República Dominicana

Telephone: (809) 549-7659
Fax: (809) 549-7757

Environmental documentation will be made available at the following locations:

Consorcio Energético Punta Cana-Macao (CEPM).
Av. Abraham Lincoln, Esq. J.F. Kennedy
Edif. Ambar, 6to. Piso
Santo Domingo

Compañía de Electricidad de Bayahibe
Carretera Dominicus
Bayahibe

Consorcio Energético Punta Cana-Macao (CEPM)
Carretera Arena Gorda
Bávaro, La Alta Gracia

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. 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 Policy on Disclosure of Information that went into effect April 30, 2006.

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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