1. PPPs in the Energy Sector Co-Generation – Belize Launch/Planning Meeting REETA Project Georgetown, Guyana February 10-12, 2014 T. Williams-Robertson Head, RE/EE Unit Office of Vice-President, Operations February 12, 2014

2. Sector Context Sector reformed under the Public Utilities Commission Act 1999 (the PUC Act) State-owned vertically-integrated electric utility monopoly transformed: – privately-owned generation, transmission and distribution company – purchasing electric power from IPPs competing in the generation market environment –Provision of open access to utility transmission system, subject to technical constraints and its licensee’s rights and responsibility to expand the system and control transmission losses Licences granted for generation/ transmission/ distribution electricity in a specified “authorised area”.

3. Stakeholders Sugar Producer – factory operations Newly established IPP to own and operate co-generation plant Local utility to purchase power Public Utility Commission Financiers Government Cane farmers

4. Project Objectives Energy security Generation of cheaper power Environmentally-friendly power –from 2010 electricity and steam requirements of sugar factory supplied – improved competitiveness in sugar production –Security for 5,000 cane farmers

5. Project Outputs 32.5 MW co-generation power plant Electricity and steam produced for the sugar factory 13.5 MW of base load power for national grid [in Belize] Bagasse from factory is primary fuel

7. Project Components 2* 90 ton/hour standard two-drum, water tube, biomass fired boilers with super heaters 2 turbo-alternators, (1 x 12.5 MWe and 1 x 15 MWe) 1* 12.5 MWe condensing/ backpressure unit 1*15 MWe condensing/ extracting unit 2*2.5 MWe medium speed generators Equipment, vehicles, other Land = 18 hectares Project Management/Engineering Services

8. Activities Undertaken/Costs Project development Feasibility studies Legal and taxation advice Loan facilitation, due diligence and capital raising Environmental Impact Assessment (EIA) Request for proposal Development and negotiation of Power Purchase Agreement (PPA) with utility Facilitation of award of the EPC contract Legal representation for all financiers, promoter/parent and for project entity

9. Project Financing Total Project Cost USD 55 mn CDB loan USD8.25 million (mn) – 18% Nederlandse Financieringsmaatschappij voor Ontwikkelingsladen N.V. (FMO) – USD10 + 5 mn CIFI - USD 6 mn IIC – USD 6 mn Parent company equity – USD 18.32 65% long-term debt and 35% equity

10. Loan Security Senior Lenders: -first legal mortgage over fixed and floating assets - debt-service guarantee from parent co. - Loan security really = future cashflow - business as a going concern - ownership/commitment of promoter to sugar operations.

11. Key Requirements Strong regulatory environment- perceived as fair Well-crafted/drafted PPA critical: –Framework guaranteeing sale of power to the national grid –Adequate tariff to cover operating costs, debt service, return Power sales under PPA: 84% of revenue in 2010?? 80% of revenue in 2011 Promoter financially able to cover cost overruns and complete project Transparent procurement of EPC contract Concessions from Govt. during construction/ initial period of operation Adequate institutional structures in place

12. Key Success Factors (2) EPC Contractor’s design assessed by independent international consulting firms for client and financiers Quality of Project Management and Engineering Consultant Supervision of construction by independent engineer for Senior Lenders Co-ordination in prompt decision making/flexibility by senior lenders Borrower engagement/commitment/open relationship with lenders Assessment of availability and quality of bagasse supply/stockpile Adequate grace period cover construction/initial ops.

13. OUTCOMES First biomass power plant in a CDB BMC Reduction utility imports/generation/ fossil fuels % Utility Energy Supply provided : –2010: 48.2 MWh = 10% –2011: 70.7 MWh = 14% –2012: 64.5 MWh = 12% Power suppliers to utility ranked by cost: –hydro purchases {lowest cost} –bagasse co-gen purchases –power imported from Mexico –utility diesel- generated

14. Outcomes Reduction in power imports: – 2009: 46% – 2010: 33% – 2011: 14.6% – 2012: 16% Fx savings Environmental benefits: –air emissions –wastewater effluent quality

15. Outcomes - Employment Employment during construction 2009 peak: –55 full-time by company main contractor –140 labourers and semi-skilled workers by main contractor – 15 employed by sub-contractors During operational phase: –52 persons employed full-time –30 temporary employees

16. Outcomes – skills enhanced Areas of enhanced worker capacity/training: pre-commissioning O&M and by EPC contractor and equipment suppliers cross-training in sugar factory interface operations health safety and environment fire fighting training first Aid; chemical handling Boiler O&M training water treatment

17. THANK YOU