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Overview

[China-Venezuela Joint Fund] China Funds USD 656,661,797.20 TermoZulia II Power Plant (linked to Record ID#35985, 58677)

Commitment Year2006Country of ActivityVenezuelaDirect Recipient Country of IncorporationVenezuelaSectorEnergyFlow TypeLoan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2006
Start (actual)
Mar 1, 2007
End (planned)
Mar 1, 2013
Last repayment
Dec 31, 2008

Geospatial footprint

Map overview

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China Funds USD 656,661,797.20 TermoZulia II Power Plant. More detailed locational information can be found at: https://www.openstreetmap.org/way/675648048

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownershipAt least 25% Chinese ownership

Funding agencies

State-owned Policy Banks

  • China Development Bank (CDB)

Cofinancing agencies

State-owned companies

  • CORPOELEC

Receiving agencies

State-owned Banks

  • Banco de Desarrollo Económico y Social de Venezuela (BANDES)

State-owned Funds

  • China-Venezuela Joint Fund

Implementing agencies

Private Sector

  • Inelectra
  • Sener

State-owned companies

  • CORPOELEC

State-owned Funds

  • China-Venezuela Joint Fund

Collateral providers

State-owned companies

  • Pétroleos de Venezuela S.A. (PDVSA)

Loan desecription

[China-Venezuela Joint Fund] China Funds USD 656,661,797.20 TermoZulia II Power Plant

Grant element10.0139%Interest rate (t₀)2.2%Interest typeFixed Interest RateMaturity3 years

Collateral

The borrowing was collateralized with PDVSA income from daily oil sales (in quantities not less than 230,000 barrels per day) to China National United Oil Corporation (ChinaOil), which was deposited in a collection (escrow) account at China Development Bank (CDB). Banco de Desarrollo Económico y Social de Venezuela (BANDES) opened and maintained a USD-denominated collection (escrow) account with CDB into which all proceeds from oil export sales -- under an offtake agreement (petroleum sales and purchase contract) between PDVSA and ChinaOil -- were deposited for the purposes of (a) making regular debt service payments to CDB, and (b) maintaining a minimum cash collateral balance. The borrower was required to maintain a minimum cash balance in the collection (escrow) account equivalent to no less than 1.3 times the aggregate amount of principal, interest, and any other amount due during the next repayment period. If the minimum cash balance was not maintained, then PDVSA would be responsible for increasing the amount of fuel and/or crude oil to be delivered under the petroleum sales and purchase contract to ensure that (a) the actual debt service coverage ratio was maintained at the required level at the required times; and (b) the amount in the New Collection Account was sufficient to meet the required balance requirements set out in the facility agreement. If PDVSA did not do so, then BANDES was responsible for transferring funds to the CDB-controlled bank account to 'remedy any shortfall.' The lender also had the ability to block the debtor from withdrawing the funds.

Narrative

Full Description

Project narrative

Termozulia II is a power plant funded by the China-Venezuela Joint Fund (see Record ID#58677) Tranche A (see Record ID#35985). The plant cost USD 656,661,797. 20. It was also financed by the Venezuelan state owned electricity company Corpoelec and FONDEN, a special fund used at the President’s discretion. It’s unclear how much of the funding for the project came from the joint fund. The implementing agencies were Inelectra and Sener. Implementation began in March of 2007. On October 24, 2008, the first 150 MW unit was put into use and the plant began to provide electricity to the surrounding areas. On May 28, 2009, the second 150 MW unit was put into operation. Units 2 and 3 are also described as TZ-04 and TZ-05, respectively. The final 170 MW unit was supposed to be completed in March of 2013, although it’s uncertain if that actually occurred. This project is part of the broader General Rafael Urdaneta Thermoelectric Complex (Complejo Termoeléctrico General Rafael Urdaneta) which includes TermoZulia I, II, III, IV, and V. Each TermoZulia plant was built at different times with different contractors and funding sources, so they are separate projects. TermoZulia I and III did not have Chinese funding sources, TermoZulia IV is captured in Record ID#91492, and TermoZulia V is captured in Record ID#91486. Despite having the same name, TermoZulia V is located approximately 122 kilometers away from the other TermoZulia plants.

Staff comments

1. Commitment date is uncertain. "COMISIÓN MIXTA PARA EL ESTUDIO DE LA CRISIS ELÉCTRICA EN EL PAÍS INFORME FINAL" gives the date as 2006. However, Tranche A of the China-Venezuela joint fund was not available until November 2007 at the earliest. 2. The 2012 report "Presupuestos y Memoria y Cuenta 2010-2013" puts the total budget at USD 656, 661, 797. 20. "COMISIÓN MIXTA PARA EL ESTUDIO DE LA CRISIS ELÉCTRICA EN EL PAÍS INFORME FINAL" suggests that the budget as of 2011 was USD 748 million. The more conservative number was used. 3. It's unclear if the plant ever reached its planned 470 MW capacity, and its status as of 2022 is unknown. Some reports suggest that the entire General Rafael Urdaneta Thermoelectric Complex was experiencing "constant failures" as of 2018. 4. It's unclear how much of the funding came from the China-Venezuela Joint Fund. 5. This project is linked to Record ID#58677, which captures the China-Venezuela Joint Fund and Record ID#35985, which captures tranche A of the fund. It is also linked to the other China-funded project in the General Rafael Urdaneta Thermoelectric Complex, Termozulia IV (see Record ID#91492). The funding for Termozulia I is unclear, and Termozulia III was funded by the Development Bank of Latin America (CAF). Termozulia V (see Record ID#91486) is not part of the General Rafael Urdaneta Thermoelectric Complex.