WASHINGTON, D.C., June 19, 1998 ---The International Finance Corporation today signed agreements to invest US$30 million in the Merida III power project, the first independent power producer (IPP) in Mexico. The 484-megawatt power plant near the city of Merida will generate enough electricity to meet the extensive power needs of the Yucatan Peninsula, which are forecast to grow at an annual rate of more than 6 percent to the year 2005.
Power generated by Merida III will be sold to Comision Federal de Electricidad (CFE), the state owned electric utility, under a 25-year purchase power agreement. The US$231 million project will enable the plant to operate more efficiently and produce bulk electricity at very competitive rates.
Mr. Vivek Talvadkar, Director of IFC’s Power Department said that Merida III will serve as a catalyst for increased private sector involvement in generating electrical power in Mexico at competitive prices. Through its significant involvement in the first IPP project, he added, Merida III symbolizes IFC’s commitment to participate in meeting Mexico’s rapidly increasing electricity demand.
IFC’s financing package includes a loan of up to US$30 million and a syndicated loan of up to US$74 million for the account of participants. AES Corporation, one of the largest independent power producers in the world, is the lead sponsor with 55 percent equity. The other sponsors are Nichimen Corporation of Japan, one of the world’s leading trading companies, and Grupo Hermes S.A. de C.V. of Mexico, an industrial group servicing the energy, automotive, and service sectors. A subsidiary of AES and Nichimen will operate the plant.
The project is consistent with IFC’s strategy of supporting transparent and competitive private sector participation in infrastructure, and focusing on structuring and financing demonstration projects in the power sector.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses.
