CAF Approves US$75mn Camisea Loan

The Andean Development Corporation (CAF) has approved a US$75mn loan for the TGP pipeline consortium of Peru's Camisea natural gas project, the CAF said in a statement on Monday. "It's very timely, we have been waiting for this for a long time," TGP's institutional relations manager Fernando Deustua told BNamericas. "The participation of the CAF and other international financing institutions in the Camisea project guarantee the implementation of a rigorous environmental and social management plan," the CAF statement said.

The loan is for 12 years, with a two-year grace period. The TGP has completed about 82% of construction work on the pipeline and invested US$575mn as of August 30, Deustua said, adding, "We are on course to finish ahead of schedule." The pipeline is due to start operations on August 9, 2004. The total cost of the pipeline, including operating expenses, will be about US$800mn, Deustua said, meaning that after accounting for the CAF loan, US$150mn is still required. The board of the Inter-American Development Bank (IDB) plans to vote on a US$75mn loan on Wednesday (Sep.10). Environmental groups are urging the IDB to follow the lead of the US Export Import Bank (Ex-Im), which voted 2-1 against a US$214mn loan for the upstream part of the project due to environmental concerns. However, "the IDB is convinced there is no environmental problem and the project should continue. We are optimistic that it will be approved," Deustua said. Nevertheless, TGP is planning a US$140mn-150mn bond issue through Peru's Banco de Credito in the event that the IDB does not approve the loan, Deustua said.

TGP would likely proceed with the bond issue even if the IDB loan does come through, though for a reduced amount, Deustua said. "It would not be postponed, but it will be less urgent," he said, adding that further details would become available after the IDB's decision on Wednesday.

The TGP transport consortium is led by Argentina's Techint subsidiary Tecgas (30%). Other members are Argentina's Pluspetrol (23.4%), Algeria's Sonatrach (11%), Hunt Oil (24.6%) and Belgium's Tractebel (9%). The US$1.5bn Camisea project will produce gas to replace coal and imported fuels in power generation. US company Hunt Oil is leading a consortium to export liquefied natural gas (LNG) from the project to Mexico.

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