French Find Mexican Power Sector Has Excellent Project Prospects

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The current debate focused on the uncertain future of the liberalization possibilities of the Mexican power generation industry and market is not detracting from the fact that it is a market where excellent quality contracts are given and the quality of the independent power producers makes financing relatively easy to secure.

The state power company CFE plans to double generation capacity by 2011, including private sector additions, and this 30,000 MW expansion provides a wealth of opportunities, according to the French power company EDF (Paris, France).

EDF will start operations of the Rio Bravo III and IV thermoelectric projects at Matamoros, Mexico in Tamaulipas state in April 2004 and 2005 respectively. Mexican constructor Keppler started engineering planning and construction work on the 495 MW Rio Bravo III project in October 2001 and the 500MW Rio Bravo IV a year later.

US company Cinergy Marketing & Trading (NYSE:CIN) (Cincinatti, Ohio) will supply gas to Rio Bravo IV under a supply contract that runs through 2021. El Paso Merchant Energy (NYSE:EPG) (Houston, Texas) will supply gas to Rio Bravo III under a 15 year contract, according to the International Financing Corporation (IFC).

The IFC is considering $218 million loans for each project. The combined total projects cost is $581 million. Decision on the loans will be taken in December.

The French bank Societe Generale will lead both syndicated loans. The IFC is expected to provide a $50 million 'A' loan and a 'B' loan of up to $168 million.