The local investors include five individuals, all of who are prominent businessmen and women in the country. BEG is a group of companies, owned and controlled by Mr. RLG Bunster, an Argentina born US entrepreneur, with a total installed capacity of about 1,188MW in the Dominican Republic, Jamaica and Panama. BEG has long and established relationships with HHI. BEG is an IFC client with two projects already committed and disbursed and two projects under pipeline.

Total project cost of $50 million will be financed 75% by debt and 25% by equity including preferred equity. Project cost includes contingency of $3.5 million. Furthermore, the additional funding support of about $8.5 million, comprising $6.375 million in the Subordinated Cost-Overrun Facilities to be provided by some of the lenders and $2.125 million in sponsors’ support is being discussed. Total contingency funding support would thus be about $12 million or 24% of total project costs.

A Senior Loan of up to $[11] million; a Project Cost Overrun Facility of up to about US$[2.125] million; and, an equity investment of up to $[1.0 to 1.5] million (with a projected equity return of about 22%), amounting to up to about $14.5 million or 29% of total project costs. At the PDS-ER, our total exposure of up to 40% of total project costs or up to $18 million was approved. IFC’s total exposure is being reduced in order to accommodate other lenders’ participation in the financing of the project.

16.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	16.0
Equity

* These investment figures are indicative

The project area is located within a non-residential and industrial zone on a 50,000 m2 in the outskirts of the capital city, Port-au-Prince within the walled area which is to become the first private-sector owned and managed industrial park in the country. It is only about 3km away from the port and has an adequate access road for transporting equipment from the port to the site.

Economic Rate of Return:

The project was based on an economic cost-benefit analysis. Costs included the capital and operating costs of the plant according to the base case financial projections. Benefits include the value of electricity generated by the plant based on the monomic price as stated in the PPA. Costs include the capital and operating expenses of the plant and the costs of fuel oil based on international import parity prices. The ERR was estimated at 15%.

Development Impact of IFC’s Activities

The project has significant risks as well as high developmental impact. The country faces immense developmental challenges in restoring social stability and economic growth and is implementing a rather ambitious stabilization plan under the auspice of the donor community, including IMF, the World Bank, and IDB. The project is a critical component of this stabilization plan, as explained earlier. The restoration of basic public services, notable reliable electricity supply, is considered among key priorities in restoring peace and stability in the country and renders legitimacy to the government and its policies supported by the international donor community. At the same time, the Project would incur ultimately an additional external debt burden on the government, as EDH is financial defunct and thus EDH’s payment obligations are guaranteed by the government. In this context, as much as the Project’s success is critical to implementing the stabilization successfully, successes on other fronts in the stabilization plan are also required to ensure the project’s success. In this context, the successful conclusion of debt relief under the HPIC initiative would be critical. The project has been supported by the World Bank; the government’s back-stopping of EDH’s payment obligations (through a sovereign guarantee) has also been supported by the IMF.
The development indicators to be monitored during project implementation will include:

- annual Mwh generated;
- taxes paid to the government and
- annual economic return on invested capital (EROIC).

E-power involves the construction of a new small diesel power generation plan on a highly intervened peri-urban area (HINSA free zone), located in Drouillard, Cité du Soleil, on a 50,000 m2, west of the country’s largest airport. The plant has been designed to meet IFC Performance Standards on Social and Environmental Sustainability, as well as the Thermal Power: Guidelines for New Plants, included in the World Bank’s Pollution Prevention and Abatement Handbook (PPAH 1998).
All the potential environmental, social and health and safety impacts and risk are of limited magnitude, mostly localized to the direct project influence area, and can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, and/or design criteria. Therefore, this project has been categorized as a B operation.

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 System
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health Safety and Security