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IFC backs construction of 100MW La Castellana wind project

IFC, a member of the World Bank Group, has closed a financial package to support the construction of one of the first projects awarded a long-term Power Purchase Agreement (PPA) from wholesale electricity market administrator CAMMESA, under Round 1 of Argentina’s RenovAr program.

The 100 MW La Castellana wind project sponsored by Central Puerto S.A., is located west of Bahia Blanca, in the southern part of the province of Buenos Aires.  The project is expected to be operational by April 2018.  Once completed, La Castellana is expected to inject approximately 450 gigawatt-hours of electricity per year into the Argentina Grid Interconnected System (SADI), contributing towards the Government of Argentina’s target of achieving 8% of its total generation from renewable generation by 2018.

The IFC long-term financing package includes a $37 million A Loan and a $27 million facility from IFC’s Managed Co-Lending Portfolio Program (MCPP), in the first project in Argentina to be financed by the MCPP.  The MCPP allows institutional investors the opportunity to passively participate in IFC’s future loan portfolio.  An additional total of $36 million in various facilities for the project were provided by the Inter-American Development Bank Group; while a local currency VAT facility of $19 million equivalent was provided by Banco Galicia.  

The financing marks the return of long-term international project financing to the power sector in Argentina, given that it has not been available since the early 2000s.  This bodes well for the financing of future RenovAr or other Public Private Participation projects in Argentina.

“The La Castellana project is expected to set a benchmark for future commercial financial institution financings for Rounds 2.0 and 3.0 of the RenovAr program, as a significant step in the attraction of diverse sources of funding to the sector”, said Gabriel Goldschmidt, Senior Manager in IFC’s Latin America and Caribbean Infrastructure and Natural Resources Department.  “The successful international financing of RenovAr program projects will in turn provide greater confidence for international lending institutions to participate in a variety of other infrastructure sectors in Argentina.”

“We are pleased to have partnered with IFC, the IDB Group and Banco Galicia to achieve this project financing for Central Puerto’s first renewable energy project in the RenovAr program,” said Fernando Bonnet, Central Puerto’s Chief Financial Officer.  “Central Puerto intends to continue to increase its electricity generation capabilities by implementing additional renewable energy projects, supporting the Government of Argentina’s objectives to diversify the country’s energy generation matrix.”