General Electric, through its energy investing unit GE Energy Financial Services, and YPF Energía Eléctrica, a wholly owned subsidiary of YPF, have secured an approximate $220 million project financing for two jointly owned thermal power projects in Argentina, the 267-MW Tucumán and 107-MW Loma Campana II projects. Citi, Credit Suisse and Export Development Canada (EDC) jointly led the financing, which represent the first power plant project financing in Argentina in almost 20 years.
Tucumán and Loma Campana II are both more than halfway through construction. The Tucumán project, located in Tucumán province, will be powered by a GE 9F.04 gas turbine and will begin commercial operations in February 2018. The Loma Compana II project, located in Neuquén province, will be powered by a GE LMS100 gas turbine and will begin commercial operations in December 2017. GE is the EPC contractor for both projects.
Once operational, each project will benefit from a 10-year power purchase agreement (PPA) with the state-run wholesale electricity market administrator Compañía Administradora del Mercado Mayorista Eléctrico SA (CAMMESA). The PPAs were awarded in 2016 as part of the Government of Argentina’s ‘Fast Power’ tender. The tender was the first of a series aimed at displacing expensive and inefficient generating capacity, and quickly increasing the country’s electricity reserve margin.
In response to Argentina’s energy environment, President Mauricio Macri has enacted several reforms and implemented new energy policies aimed at increasing electricity supply in the short term, and changing the country’s energy mix in the long term. The significant capital requirements for the ongoing and upcoming power tenders are likely to exceed the appetite of local lenders and draw participation by international lenders seeking to return to Argentina, and revive the market for non-recourse project finance.
“This project finance is an important milestone for YPF as it completes the funding of all our power projects under construction, therefore proving the ability of YPF Energía Eléctrica to continue to grow with its own balance sheet,” said Daniel González, YPF´s Chief Financial Officer.
GE Energy Financial Services’ Global Capital Advisory team, which sources financing from third parties including export credit agencies, development finance institutions and other equity providers and commercial banks, led the debt raise for Tucumán and Loma Campana on behalf of the sponsors.
“GE’s technology, global reach and capital expertise enabled a successful outcome for Argentina’s initial fast power tender and for an important GE customer, YPF,” said Bob Psaradellis, managing director, Global Capital Advisory, GE Energy Financial Services.
Daniel Castagnola, managing director, Latin America, GE Energy Financial Services, added, “There is a strong pipeline of projects in Argentina and Latin America broadly and we look forward to partnering with more international project finance lenders in the region.”
As part of the Government of Argentina’s ‘Fast Power’ tender in 2016, GE provided equipment to seven projects totaling 896 megawatts comprising 9F, LMS100 and TM2500 gas turbines.