Machado Meyer Global Infrastructure Hub Foreign

Transcript:Machado Meyer Global Infrastructure Hub Foreign:
Machado Meyer Global Infrastructure Hub Foreign Exchange Rate Risk for Infrastructure Investments: Case-Studies May 19th 2020 Disclaimer: The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views of the Brazilian Ministry of Economy. The Brazilian Ministry of Economy does not guarantee the accuracy of the data included in this work. 2018-2020 Construction and subsequent disbursements March and April, 2018 Execution of financial documents March 2020 Commercial Operation Date April, 2018 Financial Closing of debentures and First Disbursement of IFC and IDB loans CELSE – 1.5 MW LNG Powerplant (integrated to FSRU and dedicated port facility, gas pipeline and transmission line) Stakeholders Involved CELSE, and its shareholders Golar Power and EBrasil GE, as the turbine manufacturer (out of Switzerland, thus the Swiss content) and the main EPC Contractor Ocean LNG Limited, a JV between Qatar Petroleum and ExxonMobil, as the LNG long term supplier IFC and IDB invest, as project lenders Goldman Sachs, as the firm underwritter for infrastructure debentures issued by Celse, and which back-up project bonds issued by an offshore trust holding the debentures Pentágono S.A. DTVM, as fiduciary agent for the debentureholders SERV – Swiss Export Risk Insurance, the export credit agency of Switzerland, providing a 95% credit guarantee in respect of the debentures, having Credit Suisse A.G. as SERV Policyholder Agent Timeline Context CELSE – Centrais Elétricas de Sergipe S.A., is a joint venture between Golar Power (Norwegian/English capital) and Ebrasil (local player). At the time it successfully commenced its operations, in March 2020, it was the largest LNG powerplant in Brazil. The integrated project also involved the need of constructing a dedicated 33 km transmission line, a dedicated gas pipeline connecting the plant to an FSRU, and the port terminal required to anchor the FSRU. It raised BRL 5.4 billion in financing in 2018 Problem Celse sold its power through 25-year PPAs under an A-5 2015 Auction in the regulated market in Brazil. Except for the portion of the PPA price intended to remunerate the fuel consumption, the remaining portion of the PPA price is denominated in Brazilian currency and indexed to local inflation Brazil was still recovering from a major economic crisis. Local development bank (BNDES) had reduced its loan capability and was no longer offering subsidized financing. Local capital market had appetite for simpler/ smaller renewable projects, but not for large thermal plants. Cross border financing was needed, but