The company is indirectly owned by Companía Colombiana de Inversiones S.A. (“CCI” or the “Sponsor”), a diversified privately owned Colombian company duly incorporated under the Colombian Law. CCI is a Colombian holding company with focus on energy and portfolio investments that is traded in the Colombian Stock Exchange, with a market Cap of approximately $750 million. As of June 2008, CCI’s total assets totaled $1.5 billion and net income was approximately $8.3 million.

Colinversiones is mainly owned by Grupo Argos with a 28% stake, Pension Funds with a 24% stake and Suramericana with a 5% stake.

The total project cost is estimated at about $278.2 million. The proposed IFC investment is a $65 million A Loan for IFC’s own account and $92.5 million B loan from participants.

62.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	62.50
Equity

* These investment figures are indicative

The project is located in Barranquilla, Colombia, 948 kilometers north of Bogotá and 2 kilometers west of the Magdalena river.

Termoflores’ generation capacity constitutes an essential asset as it provides reliability to the system under critical hydrologic conditions and price stability to the system in dry seasons. Upon project completion, Termoflores will become Colombia’s second largest thermal company with a capacity 610 MW, thus helping the system to have an appropriate energy supply matrix and ensuring long-term energy supply.

Termoflores is the first project to be entirely financed relying only in newly created reliability charge. By supporting the project, IFC would be supporting a key initiative of the government to avoid energy shortages and maintain price stability in the system. IFC’s participation would help mitigate regulatory concerns that usually appear when there are changes in regulations.

The country will benefit of having one of the most important local private groups investing in the energy sector in the country. Although the first three phases of Termoflores have been in operation for some time, from the sponsor’s point of view, Termoflores represents its first investment in the energy sector. Additionally, during 2008, CCI acquired Merilectrica a thermal plant, and Generar and Project Montañitas two hydro projects, which will position CCI as the second thermal generator in Colombia with an installed capacity of 779MW (after project completion) and one of the main players in the Colombian energy sector. In the upcoming years CCI expects to grow through acquisitions and participating in new projects (hydro and thermo) in order to consolidate among the five largest generators in the country.

IFC is supporting a new entrant into the power sector focused on developing a significant portfolio of energy assets. IFC has long history of investing in energy projects throughout the world and thus can share its global expertise and experience to help the sponsor develop its local and regional portfolio of assets. IFC’s participation will also promote sustainability by ensuring that the development of the Project meets international social, environmental, health and work safety standards.

IFC’s role in this transaction is very significant. Commercial banking market will not be able to provide the tenor and amortization schedule that the Project requires, making it necessary that a multilateral institution like IFC absorb and mobilize an important part of the financing.. The participation of IFC would provide comfort to the commercial banks.

Termoflores is an existing natural gas fired power generation plan, which has been in operation for more than tens years. It is located on a highly intervened industrial zone of Barranquilla, and is currently in compliance with air, noise, wastewater, and solid waste Colombian discharge and emission standards as well as all labor and occupation health and safety regulations. The stack emissions are also in compliance with the Thermal Power: Guidelines for New Plants, included in the World Bank’s Pollution Prevention and Abatement Handbook (1998). The upgrade from simple to combined cycle of Flores II and III, will generated more energy without increasing fuel consumption, and operational measures such as water injection in Flores II, and the installation of a wet compression in Flores II and III, to reduce NOx emissions.

The key environmental, social, and health and safety impacts and risks associated with the project’s construction phase are those typically associated with construction and civil works such as increased noise and air emissions, construction solid waste and waste water management, occupational health and safety of construction workers, and risks associated to the operation and handling of heavy equipment and machinery.

In general terms, it can be stated that the environmental footprint of the operation of the plant per KWh/hour generated will be reduced, since this project involves the installation of a heat recovery steam generator (HRSG) on each of the two existing gas turbines (upgrade from simple to combined cycle), thus generating 169 MW more without significant additional fuel consumption. The key environmental, social, and health and safety impacts and risks associated with the operational phase are those related with increase in generation capacity of an already existing plant, and thus are limited to: (a) increase water use from 77 to 280 l/s, (b) increase sludge generation from the process water treatment system from 1.9 to 9.0 tons/day (wet base), (c) seventy percent (70%) reduction on NOx emissions, (d) reduction of temperature of the stack emissions (412 oC and 488 oC less for Flores II and III, respectively), (e) continued generation of air emission, noise, and industrial wastewater discharges, (f) continued use and handling of HAZMAT (e.g. lubricants, oil and greases, di-electric oils, etc) and subsequent generation of hazardous waste, (g) continued generation of domestic solid waste and domestic wastewater, (h) continued existing occupational risk to plant employees (e.g. working in confined spaces, hot conditions, heights, handling heavy equipment, etc), (i) continued/increased existing nuisances to nearby communities (e.g. traffic, noise, etc), (j) continued existing risks to nearby communities, associated to any potential accident or spill, and (k) reduction of approximately 460,000 tons of annual CO2 emissions (more electric energy produced without using significant additional gas, will be displaced other plants less efficient).

Given that this project will improve the environmental footprint of an existing power generation plan, and the incremental environmental, social, and health and safety impacts and risk can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, and/or design criteria, this project has been categorized as a B operation. A condition of IFC’s investment will be that Termoflores ensures that all relevant social and environmental risks and impacts, including all issues covered in IFC Environmental and Social Performance Standards, are considered and appropriately managed. Further information about how potential environmental, social, health and safety and labor impacts and risk will be addressed by Termoflores is presented in the Environmental and Social Review Summary (ESRS) for the project.