WASHINGTON, D.C., Aug. 4—The International Finance Corporation (IFC) has signed an agreement with the government of the State of Ceará, Brazil, for IFC to act as advisor for the privatization of Companhia Energetica do Ceará (COELCE), the state-owned electricity distribution company, and for the creation of a multi-sectoral state regulatory agency. IFC also signed an agreement with COELCE to act as financial adviser for the structuring and implementation of the Pecém Power Plant as a build-operate-own project.
The privatization of COELCE is part of Ceará’s modernization and restructuring program and will constitute one of the first large power-sector privatizations in the Northeast region of Brazil. COELCE, the largest company in the state, sells approximately 4,400 GWh a year to 1.3 million customers. IFC will organize an international tender to select a strategic investor to operate under long-term concession. In parallel, IFC will assist the government of Ceará in setting up the first multi-sectoral state regulatory agency in Brazil which will establish a model for future development of public services. A significant portion of the assistance for the establishment of the regulatory agency will be financed by a trust fund grant made available by the Japanese government.
The Pecém Power Plant project consists of the installation of a 240 MW combined-cycle plant in the port of Pecém at an estimated cost of US$243 million. The project will ensure security of energy supply and improve the system stability in response to the rapid demand growth and current generation capacity limitations. The Pecém project will constitute one of the first independent power producers in Brazil and the
first in the Northeast region. A grant made available by the European Commission Investment Partners (ECIP) will be used for assisting in the technical and legal preparatory work associated with the project.
"In this past decade, the State of Ceará has experienced major economic and social reforms which succeeded in creating a solid foundation for private sector development," said Paul Hinchey, Director of IFC's Corporate Finance Services Department, which is responsible for the Corporation's transaction advisory activities in connection with major privatizations and project financings. "The privatization of the electricity company and upstream activities is a stepping stone to a better use of the state's scarce resources and the improvement of the state's infrastructure and services."
"The state of Ceará decided to hire IFC to act as its advisor because of IFC's successful track record in the privatization of power companies worldwide and its expertise in the establishment of regulatory frameworks," said Mr. Ednilton Gomes de Soarez, Secretary of Finance, State
of Ceará .
IFC, the private sector arm of the World Bank Group, is the largest multilateral source of equity and loan financing and financial advisory services for private sector projects in developing countries.
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