WASHINGTON, D.C., July 19 -- The International Finance Corporation (IFC) has approved an investment of US$125 million for an environmental upgrade and expansion of Energy Center Kladno Generating (ECK Generating), a cogeneration plant located in Kladno, outside Prague. The expansion will increase the plant's output from 28 megawatts of electricity to 332 megawatts and provide clean energy at competitive rates. This is IFC's first investment in the power sector in Eastern Europe and one of the first new private power projects in Eastern Europe.
The plant will sell its output to the Central Bohemian Grid (STE) under a 20 year Power Purchase Agreement, and to Poldi, a local steel mill. It is also expected to sell hot water to the Kladno Municipal District Heating Company. Coal for the plant will be supplied under a long term agreement by the CMD mining company also located in the Kladno region.
"The project will help develop a competitive power market in the Czech Republic by demonstrating that efficient cogeneration can supply electricity at very competitive rates," said Assaad Jabre, Director of IFC's Infrastructure Department. "It also demonstrates a solution for the environmental upgrading and rehabilitation of district heating systems that is likely to be replicated elsewhere."
IFC's financing of $125 million consists of a loan on its own account of US$45 million, a syndicated loan of US$65 million, and convertible subordinated debt of US$15 million. The total cost of the project is estimated at US$375 million - Czech banks are expected to provide most of the balance of the financing.
ECK Generating will be owned by a group of investors including NRG Energy, Inc., a subsidiary of Northern States Power of Minnesota; STE and Independent Power, the Prague-based, original developer of the project.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
