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Overview

[China-Venezuela Joint Fund] China funds USD 337 Million Juan Bautista Arismendi Power Plant (linked to Record ID#58677)

Commitment Year•2008Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•EnergyFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Aug 11, 2008
End (planned)
Aug 4, 2011
End (actual)
May 18, 2018

Geospatial footprint

Map overview

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The Chinese Government provided USD 337 million to help construct the Juan Bautista Arismendi Power Plant in El Guamache , Nueva Esparta, Venezuela. More detailed locational information can be found at: https://www.openstreetmap.org/way/575144571

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)

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

  • Derwick and Associates
  • Inserven de Venezuela C.A.

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 337 Million Juan Bautista Arismendi Power Plant

Interest type•Unknown

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

The China-Venezuela Joint Fund was used to build the USD 337 million Juan Bautista Arismendi Power Plant. The project contract was signed on August 11, 2008, so the plant was funded by either Tranche A (Record ID#35985) or Tranche B (Record ID#37528) of the China-Venezuela Joint Fund (see Record ID#58677). The primary contractors for the project were Derwick Associates and Inservern. The project was supposed to have a capacity of 170 MW and be completed on July 4, 2011. The plant was completed on May 15, 2018 with a reported capacity of 140 MW, although sources vary on the true capacity. It burns natural gas and diesel. On May 12, 2021, a fire broke out at the plant which destroyed both turbines. Corpoelec blamed the plant's failures on vandalism in November of 2021. Bewick and Associates has been indicted in multiple jurisdictions, including Florida, New York, United States, and Andorra on corruption-related allegations. A 2014 Wall Street Journal investigation found that the company significantly overcharged for the turbines used in the Juan Bautista Arismendi project.

Staff comments

1. No transaction amount is included because the amount is captured by one of the subprojects to Record ID#58677. 2. It is unclear exactly when construction began. Sources also vary as to the amount actually installed and the amount the plant was producing before it was destroyed.