The two projects are being developed by Century Energy Corporation (Century), a Panamanian company wholly owned by the Helm Group. The Helm Group is a foreign-owned Colombian conglomerate, operating in a range of businesses with most of its companies located in Colombia but also with presence in other Latin American countries and the U.S.

The project companies will enter into arms-length, fixed price engineering, procurement and construction (EPC) and operation and maintenance (O&M) agreements with HMV Ingenieros which is also wholly owned by the Helm Group. HMV Ingenieros is one of the largest engineering consulting firms and the leading consultant for the power sector in Colombia.

Total project cost is estimated at $43.7 million ($21.5 million for Caruquia and $22.2 million for Guanaquitas). The project will be financed with $31.0 million of debt and $12.7 million of equity contribution from Century. The proposed IFC investment includes a $13.0 million A loan and a $2.5 million C loan, both for IFC’s own account.

15.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.50
Equity

* These investment figures are indicative

The project will be built in the Guadalupe river basin in Santa Rosa de Osos municipality of Antioquia Department in western Colombia. The project sites are accessible via an existing road from Medellin. The project sites are in a rural area used primarily for cattle grazing and with low population density.

The project is expected to generate positive development impact through:

- Increasing energy supply:

The project will contribute to increasing Colombia’s installed power generation capacity and supplying additional electricity to meet the country’s growing energy demand.

- Provision of clean, renewable energy:

The project will generate clean, emissions-free electricity from a renewable resource and thereby contribute to mitigating climate change impacts.

- Low cost source of energy:

Run-of-river hydropower is a very low cost source of electricity and thus the project will assist in increasing the portfolio of lower cost hydropower generation assets in Colombia.

- Fiscal transfers to government:

The project will generate revenues to the government through payments for use of water from the Guadalupe river, sector charges and income tax payments.

IFC has been working closely with the sponsor and has assumed an active role in structuring a bankable financing plan for the project. IFC’s contribution includes:

- Mobilizing long-term financing and project structuring:

IFC is providing up to 15 years financing. Long term limited recourse financing is not readily available in the local financial market. The Colombian power market does not currently provide long-term power purchase agreements (PPAs) which make it difficult for investors to secure long-term financing. IFC is playing an important role in demonstrating and promoting limited recourse project finance as a viable alternative for financing small sized infrastructure projects, in particular small hydros. IFC is also leveraging its in-house capabilities (including legal, environmental, insurance, technical and market) to help reduce project costs and allow for an efficient project financing structure.

- Supporting a local sponsor:

IFC is supporting the Helm Group, a well-known Colombian business group, to make entry into the renewable energy generation sector. IFC has a long history of investing in renewable energy projects throughout the world and thus can share its global expertise and experience to help the sponsor. The sponsor is interested in developing a portfolio of renewable energy projects in Colombia and IFC can prove a valuable partner in assisting the sponsor to achieve its goal.

- Support small hydropower projects:

By helping structure and demonstrate the viability of private sector investment in small hydropower projects, IFC is contributing to boosting investor interest in small hydros and thus aiding the Colombian government’s goal to further harness the country’s significant small hydro potential.

- Environmental & social performance standards:

IFC’s participation will also promote sustainability by ensuring that the development of the project meets international safety, social, environmental, health and work safety standards.

This is a category B project according to IFC’s procedure for Environmental and Social Review of projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. While all Performance Standards (PS) are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health and Safety; and
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management.

The properties upon which the project components will be constructed are in the process of being acquired through voluntary transactions with the sellers. Additionally, the construction and operation of the proposed project will not result in the physical or economic displacement of previous land owners. There are no indigenous lands or indigenous people located within the project area of influence. The land is not expected to include archeological or other cultural resources although the company will implement a chance find procedure to address the eventuality of archeological finds during the construction phase.