China Eximbank provides $331.5 million preferential buyer's credit for 312 MW Jujuy Caucharí Photovoltaic Power Plant Project (Linked to Record ID#69556)

Project narrative

On November 27, 2017, China Eximbank and the Republic of Argentina signed a $331,500,000 preferential buyer credit (PBC) agreement [CHINA EXIMBANK PBC NO (2017) 22 TOTAL NO (44) No. (1420303052017212623)] with the Republic of Argentina for the 312 MW Jujuy Caucharí Photovoltaic Power Plant Project. The PBC, which is captured via Record ID#54783, carried the following borrowing terms: a 3% interest rate, a 0% default (penalty) interest rate, a 15 year maturity, a 5 year grace period, a 0.75% commitment fee, and a 0.75% management fee. The Republic of Argentina subsequently entered into an on-lending arrangement — through a subsidiary loan agreement — with the Government of the Province of Jujuy. The ultimate borrower (the Government of the Province of Jujuy) was expected to use the PBC proceeds to finance approximately 85% of the cost of a $390 million commercial (EPC) contract between Jujuy State Energy and Mining Society (JEMSE) and Shanghai Electric Power Construction Co. Ltd, which was signed on August 12, 2016 and amended on February 3, 2017. The Government of the Province of Jujuy agreed to fund the remainder (15%) of the commercial contract cost through the issuance of green bonds. The loan's (principal) amount outstanding was $0 as of December 31, 2018, $311,128,347.77 as of December 31, 2019 and $311,128,347.77 as of December 31, 2020. This project, which is also known as the Cauchari Solar I, II and III Photovoltaic Parks, involved the installation of 1.2 million solar panels that provide the grid with 312 megawatts of power. Upon completion, the 312 MW complex was expected to generate close to $1 billion in revenue to Jujuy over its first 15 years of operation. It was expected to eventually expand to produce more than 500 megawatts, making it one of the largest solar plants in the world. This photovoltaic park is located in the town of Cauchari. The provincial energy company, Jujuy State Energy and Mining Society (JEMSE), managed the operation of the solar power complex while construction was executed by Shanghai Electric Power Construction Co. Ltd and Powerchina Ltd. Another Chinese company, Zhongli Talesun Solar Co., Ltd., supplied the 1.18 million solar panels and Huawei Technologies Co., Ltd. provided the inverters. On October 6, 2017, a project construction initiation ceremony was held. The project was officially completed on December 7, 2019. During the G20 Summit in Argentina from November 30 to December 1, 2018, the Government of Argentina and the People's Republic of China agreed to expand the Cauchari Solar Park in Jujuy, Argentina from a 312 MW solar park to a 500 MW solar park. The Export-Import Bank of China reportedly agreed in principle to issue a $170 million loan (captured via Record ID#69556) to the Government of the Province of Jujuy in Argentina for the 200 MW expansion of the Cauchari Solar Park (known as Cauchari IV and V), which would cover 85% of the total ($200 million) cost of the project. If approved, the China Eximbank loan would require a sovereign guarantee from the central (national) government and carry the following borrowing terms: a 3% interest rate, a 3-year grace period, and a 15-year maturity. The loan approval process will reportedly take up to eight months after a power purchase agreement (PPA) is signed with Cammesa, since China Eximbank will require up to four months to approve the loan. Argentina’s national government will also need up to four months to approve the loan, because it comes with a sovereign guarantee which is already included in the 2021 budget. As of November 2020, the Government of the Province of Jujuy was still negotiating the power purchase agreement (PPA) with Argentina’s energy ministry. If the project is financed, it will also reportedly involve the expansion of a transformer station in Cobos and the construction of a 220-kW high-voltage line from the Altiplano substation to the town of La Quiaca. The addition of another 200 MW will also require the installation of 400,000 panels of a new available technology (500 volt instead of the current 330 volts), on an area of 1,200 hectares.