WASHINGTON, D.C., May 12, 1998—The International
Finance Corporation is financing a 24-megawatt geothermal power plant,
the first of its kind in Guatemala and the first such investment for the
IFC. The project, identified as one of the most attractive least-cost
alternatives for new generation, will convert geothermal steam and brine
into electricity drawn from the Zunil geothermal field.
Ormat Industries Ltd. of Israel, a renewable energy equipment manufacturer,
is the project’s developer and will provide its technology and equipment
and also build and operate the plant. The electricity produced by
the power plant will be sold to Instituto Nacional de Electrificacion,
the national electricity company responsible for most of Guatemala’s power
generation, transmission, and distribution.
IFC played a major role in structuring the project and helping to bring
in other sources to finance it. The Corporation’s investments in
Orzunil, the company created to implement the project, include a loan of
up to US$12 million for IFC’s own account and an equity investment of
up to US$2.3 million. It also mobilized up to US$15 million for the
account of participants.
Guatemala has experienced power shortages due to insufficient generation
capacity, heavy dependence on hydro facilities, and old and inefficient
thermal plants. The country’s consumption of electricity is currently
one of the lowest in the world. With modernization and economic expansion,
electricity demand is forecasted to increase more rapidly than the rate
of economic growth.
New electricity sources are required to support higher living standards
and new businesses needed for economic development. Vivek Talvadkar,
Director of IFC’s Power Department, said that the project would provide
Guatemala with the much needed base load generation capacity to develop
a renewable resource and competitively meet the country’s projected demand
for electricity in the coming years.
As the first geothermal power plant, the project serves as a model for
future development of geothermal private power in the country. The project
is consistent with IFC’s strategy of promoting investment in renewable
energy and also increasing the role of the private sector in power generation.
IFC, part of the World Bank Group, fosters economic growth in the developing
world by financing private sector investments, mobilizing capital in the
international financial markets and providing technical assistance and
advice to governments and businesses.