Narrative
Full Description
Project narrative
In June 2012, a special purpose vehicle and wholly-owned subsidiary of Petróleos de Venezuela, S.A. (PDVSA) signed a $517 million syndicated PxF facility with Deutsche Bank, WestLB, Banco Espírito Santo (BES), Natixis, China Development Bank (CDB), Banco de Venezuela, Banco del Orinoco, Banco Nacional de Credito, Fondo de Proteccion Social, and Banco Provincial Overseas for the 175MW Juan Manuel Valdez Guiria Power Plant Construction Project. The facility included a USD tranche and an EUR 274.9 million tranche and carried a 3-year maturity, no grace period, and an unspecified interest rate. CDB reportedly contributed EUR 75 million. The transaction was structured as a prepayment from a special purpose vehicle to a subsidiary of PDVSA whose performance was guaranteed by PDVSA. Under the prepayment structure, the funds were to prepay the export of crude oil and related oil products. PDVSA was then to use the funds to finance capital expenditures related to the 175MW Juan Manuel Valdez Guiria Power Plant Construction Project. The purpose of the EUR 709 million project was to construct the 175MW Juan Manuel Valdez Guiria Power Plant in Güiria within Sucre state (exact locational coordinates: 10.562024, -62.310042). The project also involved the development of pipelines bringing offshore gas to the power plant. Construction began in October 2012. The power plant was officially inaugurated on May 11, 2018.
Staff comments
1. A pre-export finance (PXF) facility is an arrangement in which a commodity producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed.