allowed to sell electricity to industrial customers that hold a nominal 2 per cent share in the
project. This is just a legal requirement; these companies have no shareholders’ rights.
InterGen deliberately oversized the project so as to be able to offer the CFE a lower electric-
ity tariff. This helped the developer win the bid from the CFE against heavy competition and
establish a position in the nascent Mexican wholesale power market.
Financing for the Bajio project, which closed in June 2000, came from:
•a US$22.5 million IDB A loan;
•a US$113 million B loan syndicated by BNP Paribas, Citibank, Deutsche Bank and
Dresdner; and
•a US$215 million commercial paper facility provided by Citibank.
Commercial paper offers the project lower-cost financing than a loan based on the London
interbank offered rate (Libor) would have. Citibank will sell the commercial paper through a
conduit vehicle called Govco, which it developed several years ago for government-guaran-
teed financings. This is the first time that this vehicle has been used for a non-recourse pro-
ject financing.
The commercial paper is backed by a comprehensive guarantee from the Export-Import
Bank of the United States (US Eximbank), which further reduces the cost. US exports include
gas and steam turbines from General Electric Power Systems. US Eximbank set a precedent
with this financing as well. Bajio is the first project for which its comprehensive guarantee
covers both the construction and the operating period.
Bankers based their credit decisions primarily on the PPA with the CFE, considering that
the risk related to industrial sales would be borne by the sponsors. In an unlikely worst-case
scenario, the sponsors would bear the cost of a 600 MW plant but only receive the revenue
from a 495 MW PPA. From a business perspective, some see InterGen as breaking even on
the PPA and making its profit on the industrial sales.
La Rosita I and II
In December 2001 InterGen closed a US$625 million commercial bank financing for La
Rosita I and II (formerly called Rosarito but renamed because of confusion with other pro-
jects), in Baja California, about six miles south of the US border. Of the total amount, US$420
million is covered by political risk insurance from the Export Development Corporation of
Canada. The covered portion has a tenor of 15 years and the uncovered portion 11 years.
Guillermo Espiga, Director – Finance, Latin America, for InterGen Energy, Inc., in Coral
Gables, Florida, noted that the successful syndication of the Bajio project helped with this
financing. As with Bajio, InterGen oversized La Rosita I in order to achieve economies of
scale and to be able to offer a better rate to the CFE. InterGen will use 500 MW of the plant’s
capacity to sell to the CFE and 250 MW to export to the California market.
La Rosita I and II is the first Mexican IPP in which the developer rather than the CFE
has selected the site, which in this case was based on serving both the Mexican and the
Californian markets. Also, instead of buying fuel from Pemex Gas y Petroquimica Basica
(Pemex), the Mexican state-owned energy company, as previously established IPPs have, La
Rosita I and II has the flexibility to arrange its own fuel supply from either the US or the
Mexican market.
POWER PLANT