[China Co-Financing Fund] IDB administers $50 million CHC loan for 1.5GW Porto de Sergipe I Combined-Cycle Gas-Fired Power Plant Construction Project (Linked to Project ID#86526)
Commitment amount
$ 54492487.39393384
Adjusted commitment amount
$ 54492487.39
Constant 2021 USD
Summary
Funding agency [Type]
People's Bank of China (PBC) [Government Agency]
Recipient
Brazil
Sector
Industry, mining, construction (Code: 320)
Flow type
Loan
Level of public liability
Private debt
Infrastructure
Yes
Category
Project lifecycle
Geography
Description
On April 12, 2018, IDB Invest (the private sector institution of the Inter-American Development Bank (IDB) Group, formerly Inter-American Investment Corporation, or IIC), signed a loan package with Centrais Elétricas de Sergipe SA (CELSE) — a special purpose vehicle and joint venture of Eletricidade do Brasil (EBRASIL) and Golar Power, which is itself a joint venture of Golar LNG and Stonepeak Infrastructure Partners — for the 1.5GW Porto de Sergipe I Combined-Cycle Gas-Fired Power Plant Construction Project. Through this loan package, the People's Bank of China would provide $50 million via the China Co-Financing Fund for Latin America and the Caribbean (CHC) and IDB Invest agreed to provide up to 664 million Brazilian reais and $38 million. The China Co-Financing Fund for Latin America and the Caribbean loan has a 14-year interest and a floating (LIBOR-based) interest rate. It is secured by (i.e. collateralized against) a first-priority lien in all ‘Project Collateral’. The loan agreement's definition of ‘Project Collateral’ can be found in the collateral section of the loan details. The IDB approval date for this loan financing was December 12, 2017, and it refers to this project as "Porto de Sergipe LNG-to-Power Project," project code 12048-01. The project was additionally co-financed by a $200 million loan from the International Finance Corporation, as well as a bond issue for approximately $1 billion in reais at a fixed, long-term rate in international markets, 95% guaranteed by SERV, the Swiss export and import credit agency. The bond issue was coordinated by Goldman Sachs and settled through Swiss Insured Brazil Power Finance, a Luxembourg-based special purpose vehicle. General Electric provided separate financing as well The purpose of the project is to construct a 1.5GW (1,551 MW) combined-cycle gas-fired power plant in Barra dos Coqueiros, Brazil. The project also involves the construction of a 33km-long, 500kV transmission line (connecting the high-voltage Jardin substation located in Nossa Senhora do Socorro). Lastly, the project involves the construction of a floating storage and regasification unit (FSRU) and associated facilities (a submarine pipeline and water intake and sewage pipes). Upon completion, the power plant is expected be the biggest thermal power plant in Brazil by capacity. Centrais Eletricas de Sergipe (CELSE) is the owner and developer of the power plant. The Porto de Sergipe LNG-based power plant is being developed on a 511,622m² (51.16ha) site located approximately 10km away from Aracaju. The combined-cycle power plant will be equipped with three GE 7HA gas turbines, a heat recovery steam generator (HRSG), and a steam turbine also from GE. Other infrastructure that will be part of the plant includes a cooling tower, a water treatment plant, and an onsite substation. The plant is expected to operate with an efficiency of more than 62%. Natural gas will be delivered to the plant through a pipeline from a floating storage and regasification unit (FSRU) to be stationed 6.5km away from the coastline. The FSRU will have 170,000m³ of LNG storage capacity and 21 million cubic meters a day (Mcmd) of regasification capacity. It will receive LNG by tankers and LNG carriers. CELSE signed an agreement with Golar Power to charter the Golar Nanook FSRU for 25 years for the power plant in October 2016. The electricity generated by the Porto de Sergipe power plant will be sent to the National Interconnect System (SIN) through the 33km-long, 500kV transmission line connecting the high-voltage Jardin substation located in Nossa Senhora do Socorro. The electricity generated by the plant will be sold to 26 different customers under multiple long-term power purchase agreements (PPA) executed through an auction by the Brazilian government in April 2015. Further, it operates as a backup base load power plant and is expected to dispatch to the national grid between 30‐50% of the time, as required by the Electric System National Operator (ONS). General Electric was awarded the engineering, procurement, and construction (EPC) contract for the Porto de Sergipe power plant in October 2016. The scope of the contract includes supply and installation of three 7HA gas turbines, a steam turbine, a HRSG, as well as the 33km transmission line and the substation. GE also entered a contractual service agreement (CSA) and a long-term operations and maintenance (O&M) agreement for the majority of the project in October 2016. Sapura Energy was awarded the EPC contract for the gas pipeline portion of the Porto de Sergipe power project in November 2017. It is also responsible for the transportation and installation of the FSRU mooring system as well as for the FSRU hook-up. Golar LNG was contracted as the O&M operator for the FRSU. Black & Veatch was appointed as the owner’s engineer for the Porto de Sergipe power plant in November 2016. Construction started following the final investment decision (FID) in October 2016. The power plant was originally scheduled to come online in January 2020. The project ultimately reached its commercial operations date (COD) in March 2020.
Additional details
1. The loan agreement can be accessed in its entirety via https://www.sec.gov/Archives/edgar/data/1806220/000114036120019395/nt10010929x7_ex10-17.htm and and https://www.sec.gov/Archives/edgar/data/1806220/000114036120019395/nt10010929x7_ex4-1.htm. 2. The China Co-Financing Fund was established on January 14, 2013 with a contribution of $2 billion by the People's Bank of China, and it is administered by the IDB. For more information, see umbrella Project ID#86526. 3. This project is also known as the Porto de Sergipe I LNG-to-Power Project. The Portuguese project title is Usina Termelétrica Porto de Sergipe I 4. Some technical specifications about the project (ex., the MW capacity, length of transmission line) are not precisely the same between the Environmental and Social Review Summary and the CELSE website, though are approximately equivalent. When in disagreement, the numbers from the CELSE website are used, insofar as the webpage was updated following the completion of construction, and the ESRS prior to. 5. CELSE is 50% owned by EBRASIL (Eletricidade do Brasil), a Brazilian company. The other 50% is owned by Golar Power – a joint venture between the Norwegian Golar LNG and the American investment fund Stonepeak Infrastructure Partners, according to IDB Invest. Golar LNG is a subsidiary of New Fortress Energy, which is listed as the other stakeholder on the CELSE website. CELSE was created in 2015.
Number of official sources
12
Number of total sources
18
Details
Cofinanced
Yes
Cofinancing agencies [Type]
IDB Invest (Inter-American Investment Corporation) [Intergovernmental Organization]
International Finance Corporation (IFC) [Intergovernmental Organization]
General Electric Co. (GE) [Private Sector]
Direct receiving agencies [Type]
Centrais Elétricas de Sergipe SA (CELSE) [Joint Venture/Special Purpose Vehicle]
Implementing agencies [Type]
General Electric Co. (GE) [Private Sector]
Golar LNG [Private Sector]
Eletricidade do Brasil (EBRASIL) [Private Sector]
Stonepeak Infrastructure Partners [Private Sector]
Sapura Energy [Private Sector]
Black & Veatch [Private Sector]
China Co-Financing Fund for Latin America and the Caribbean (CHC) [Intergovernmental Organization]
Collateral
First-priority lien in all ‘Project Collateral’, which is defined as (a) Fiduciary assignment (alienação fiduciária) and conditional usufruct of shares in respect to any and all shares (current and future) issued by CELSE and held by CELSE’s shareholder, comprising all earnings, benefits and rights attached to them, including profits, dividends, interest on equity and all other values that otherwise may be distributed by CELSE, as well as all voting rights associated with such shares, including, but not limited to, (1) any and all assets into which the fiduciarily assigned shares may be converted (including any certificates of deposits or securities); (2) any and all shares that may be attributed to CELSE’s shareholder, or to any legal successors or new shareholder(s) through acquisition, subscription or otherwise by virtue of swaps, splits, reverse splits, exercise of preemptive rights arising from the fiduciarily assigned shares, bonuses and/or conversion of debentures issued by CELSE; (3) any and all shares, securities and other rights that may come to replace the fiduciarily assigned shares, in view of their cancellation, merger, spin-off or any other form of corporate reorganization involving CELSE; and (4) any and all dividends, interests on equity, and any other values that otherwise may be distributed as economic advantage of the shares, as well as any common or preferred shares which HoldCo may own in the future in the corporate capital of CELSE, governed by Brazilian law. (b) Fiduciary assignment (alienação fiduciária) of the Project’s machinery, equipment and moveable assets by means of which CELSE assigns on a fiduciary basis the legal title (but not the possession) over the equipment and assets listed in the relevant annex thereof governed by Brazilian law. (c) Fiduciary assignment (cessão fiduciária) of all credit rights and receivables of CELSE on all current and future rights arising from and related to the PPAs, as well as any and all rights emerging from the ANEEL Authorization, including any amendments thereto, and on all other credit rights and proceeds from the sale of electricity produced by CELSE under the Project, transferred from the Conta Centralizadora or Conta do Vendedor, pursuant to the terms of the Contrato de Constituição de Garantias de Pagamento via Vinculação de Receitas, annexed to the PPAs, as well as the proceeds from other energy trading contracts in the regulated environment or in the free market that may be contracted by CELSE, including any electricity derived from bilateral agreements purchased to supply any deficiencies. Such fiduciary assignment shall also cover the funds deposited in controlled accounts managed by the Project Collateral Agents (as defined below) on behalf of the Project Senior Creditors pursuant to the Project Accounts Agreement, governed by Brazilian law. (d) Fiduciary assignment (cessão fiduciária) of bank accounts in respect to all credit rights to each of the relevant bank accounts established under the Project Accounts Agreement, including: (i) all interest, dividends and other income derived from the balances and funds from time to time held in such accounts; (ii) all moneys and cash equivalents in kind deposited therein and (iii) all assets, securities or any other financial instrument arising out of investments made with the funds in deposit and to be deposited in such accounts, governed by Brazilian law. (e) Fiduciary assignment (cessão fiduciária) of the Project Documents comprising all payment of rights, credits, guarantees, fines, penalties, indemnification and any other credit rights, on whatever account, as well as the instruments, certificates, letters of credit and collection documents themselves evidencing, representing, ensuring or otherwise securing the granting or payment thereof, including, without limitation, invoices, trade notes, bill of exchange and exchange contracts, governed by Brazilian law. (f) Fiduciary Assignment (cessão fiduciária) of insurance comprising: (i) each insurance policy purchased by CELSE, and (ii) each reinsurance policy held by each insurer of CELSE, under which CELSE is entitled to credit rights, revenues and receivables, by means of cut-through clauses existing in the insurance policies, (the agreement governing the securities Project Collateral described in clauses (c) to (f), the Conditional and Fiduciary Assignment Agreement). (g) Fiduciary assignment (alienação fiduciária) of the Power Plant and corridor areas corresponding to the real estate and properties where the Power Plant and the corridor areas will be implemented, including all indemnifications payments that can be received regarding damages and expropriations related to such real estate and properties, governed by Brazilian law. (h) Fiduciary assignment (alienação fiduciária) of the Connection Bay Area corresponding to the real estate and properties where part of the connection bay will be implemented, including all indemnifications payments that can be received regarding damages and expropriations related to such real estate and properties, governed by Brazilian law. (i) Fiduciary assignment (alienação fiduciária) of rights related to the Transmission Line area corresponding to the easements over the real estate and properties where part of the Transmission Line will be implemented, including all indemnifications payments that can be received regarding damages and expropriations related to such real estate and properties, governed by Brazilian law (the agreements governing the securities under (g) to (i), the Fiduciary Assignment of Real Estate Agreements). (j) Assignment of all tangible and intangible assets of CELSE, including, the Project Documents, accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property, cash, commercial tort claims, letter of credit rights, intercompany notes, insurance rights and proceeds of the foregoing, governed by New York law. (k) Assignment of Project Documents governed by English Law, namely (i) the FSRU Charter Agreement; (ii) FSRU Services Agreement; (iii) the EPC Contract and (iv) O&M Agreements governed by the Laws of England and Wales. (l) Assignment of Project Documents governed by New York law, namely (i) the LNG SPA, the EPC Guarantee, the LNG SPA Comfort Letter, the PO Guarantees, and the credit support documents under which CELSE is a beneficiary of governed by New York law. (m) Assignment of the Offshore Accounts, governed by New York law. (n) Assignment of the Swiss Accounts, governed by Swiss law. (o) Fiduciary Assignment of Subordinated Loan Agreements (agreements governing Project Collateral described in clauses (a) to (o), the “Security Interests Agreements”). The Project Collateral corresponding to the remaining parts of the areas indicated in clauses (h) and (i) above will only be required to be perfected after CELSE has acquired the respective rights related thereto. In addition, the Project Collateral listed in clause (g) will only be required to be perfected after 60 days from the Closing Date. The loan agreement also specifieds that the borrower (CELSE) will grant a second-lien security interest in all of CELSE’s right, title and interest in, to and under (i) Brazilian Debentures Project Accounts, (ii) the Equity Contribution Account and (iii) all proceeds with respect to the foregoing, collectively, the Second Lien Secured Property, to the LC Issuer in accordance with the Closing Date LC Agreement.
Loan Details
Maturity
14 years