Independent power producer Gaz Et L’Energie (GEL) is seeking a financial advisor to support the financing of the 500MW thermal power plant in Peru, three sources briefed on the situation said.
The sponsor is understood to have visited New York City earlier this year to meet potential advisors and introduce the USD 500m combined-cycle gas-fired power project, which will be built in the Independencia district in the Ica Region in Peru.
Two sources pointed out that, as far as the developer has yet to sign a long-term power purchase agreement (PPA), the bankability of the project might be challenging, especially in Peru where prices in the electricity spot market are reportedly low.
However, as Peru’s GDP is expected to grow for both 2018 (4%) and 2019 (3.7%), according to research from Credicorp Capital, electricity demand could ramp up.
In December last year, manufacturer Mitsubishi Hitachi Power Systems (MHPS) said it had won an EPC contract to construct and provide the technology for the project, which will employ the M501JAC gas turbine.
The developer also reached a 20-year agreement with gas distributor Contugas, a subsidiary of Colombian developer Grupo Energía Bogotá (GEB). According to GEB, GEL agreed to buy 37.5 million cubic feet of gas per day (MMcf/d) at USD 1.8m per month. The agreement includes that 80% of that amount is covered under take-or-pay basis.
According to GEL’s application for environmental license, the project includes the construction of a 220kV power transmission line stretching over 123 meters to connect the plant to the Independencia Substation.
The facility is slated to become operational by the end of 2020.
GEL did not return calls seeking comment.