Financing Energy Transactions in Latin America INTER-AMERICAN DEVELOPMENT BANK Financing Energy Transactions in Latin America Structured and Corporate Finance Department October 2008

Inter-American Development Bank (IADB) Regional multilateral institution with 47 member countries dedicated to accelerate economic & social development in Latin America and the Caribbean Structured and Corporate Finance Department Responsible for non-sovereign guaranteed operations at IDB Privately controlled entities in all sectors of the economy Utilities and other infrastructure operators Banks and other financial market institutions Corporates with annual sales of US$100 million and above

Non-Sovereign Guaranteed Financing Operations in 18 countries and two regional funds US$22.7 billion in investment costs US$4.2 billion in direct financing and guarantees US$4.5 billion in syndicated/placed participations 90+ banks and institutional participants in B-Loan program

IDB/SCF - Financial Products Syndicated A and B loan facilities Financial and political risk guarantees Financing Parameters: Financing up to 25-40% of total cost of greenfield transactions Financing up to 50% in expansions and refinancing Project Limits at US$200 or US$400 million/exceptional basis Tenors up to 30 years Market-based pricing

Transaction Cycle INITIAL DESK ANALYSIS & ELEGIBILITY Mandate Letter SELECTION OF ARRANGER/AGENT BANK, when required FINANCIAL CLOSING AND DISBURSEMENT NEGOTIATION OF TERMS AND CONDITIONS Due Diligence (Legal, regulatory, technical, environmental, economic and financial) BOARD APPROVAL

Energy Financing Electricity Generation and Transmission Traditional and renewable Energy Efficiency Investments Oil & Gas Infrastructure bottlenecks Environmental mitigation and upgrades Biofuels Cane-based ethanol Cane outside Brazil and alternative ethanol feedstocks Biodiesel

Generation & Transmission: Sample Projects ATE II - 937 km power transmission line in Brazil Campos Novos - 880 MW hydro-power plant in Brazil Novatrans - 1,278 km power transmission line in Brazil TermoPernambuco - 520 MW thermal power plant in Brazil Termobahia - 190 MW thermal power in Brazil Bajio Energy - 600 MW combined cycle plant in Mexico Light Energy Services - CAPEX program for a power distribution company in Brazil Termoelectrica del Golfo - 230 MW thermal power plant in Mexico Aguaytia - 240 MW integrated power project in Peru

Transchile 2007 Country: Chile Description: Construction and operation of 204 km transmission line Sponsors: Alusa and Cemig (Brazil) Project Cost: US$68 million Financing: A loan US$16 million B loan US$27 million Security: Project finance package, equity support Key contracts: Decreto de Adjudicación for indefinite period, EPC contract Risk profile: Construction, ROW, regulation Highlights: 20 year tenor Work with indigenous community

Oil & Gas Capacity Development and Expansion Peru LNG Production and transportation bottlenecks Pipelines, terminals, logistics facilities Environmental mitigation and upgrades Refinery upgrades

Energy Efficiency Investments Cogeneration Industrial sector Agribusiness sector Biofuels Green buildings Financing of ESCOs

Biofuels Cane-based ethanol Brazilian capacity expansion CNAA Cane-based ethanol outside Brazil Colombia, Peru, Central America, Caribbean Ethanol from other feedstocks Sugar beet, sweet sorghum Biodiesel Food crops versus non-food crops Soybeans, jatropha, oil palm

Green Energy Program - Objective Support development, construction and operation of creditworthy Green Energy Projects that: contribute to the diversification of energy supply reduce dependence on imported fossil fuels reduce greenhouse gas emissions and environmental footprint of energy generation reduce consumption and growth in energy demand Sectors under the program include biofuels, energy efficiency and renewable energy projects (small-scale hydros, wind, geothermal, wave/currents, solar, biomass, waste-to-energy, other technologies)

Green Energy Program - Financial Tools Debt senior and structured debt under A/B loan structure from SCF & IIC subordinated/mezzanine debt from IIC Guarantees partial credit political risk Equity equity from IIC Technical Assistance InfraFund SECCI Funds donor trust funds Climate Investment Fund (under development)

SECCI Initiative Sustainable Energy and Climate Change Initiative (SECCI) Expand the development and use of renewable energy sources $20 million contribution from IDB and $2.8 million contribution from the United Kingdom 4 Pillars to enable: Renewable Energy and Energy Efficiency Biofuels Development Increasing Access to Carbon Finance Adaptation to Climate Change

Infrafund - Innovation in Infrastructure Grants to Support Project Preparation: US$20 million technical assistance fund dedicated to support feasibility studies Generate bankable projects Promote infrastructure investments throughout the region Main Parameters: Up to US$1.5 million per project Minimum 20% counterpart financing requirement Open to any client, public or private

Contact Information Jean-Marc Aboussouan Warren Weissman Chief Chief Infrastructure Department Corporate Finance Division Email: jeanmarca@iadb.org Email: warrenw@iadb.org Susan Wermcrantz Davis Carla Tully Senior Investment Officer Investment Officer Infrastructure Division Corporate Finance Division Email: susanw@iadb.org Email: carlat@iadb.org Structured and Corporate Finance Department Inter-American Development Bank 1300 New York Avenue, N.W. Washington, DC 20577 – USA http://www.iadb.org/pri/