WASHINGTON, D.C., June 19, 1998 ---The International
Finance Corporation today signed agreements to invest US$30 million in
the Merida III power project, the first independent power producer (IPP)
in Mexico. The 484-megawatt power plant near the city of Merida will generate
enough electricity to meet the extensive power needs of the Yucatan Peninsula,
which are forecast to grow at an annual rate of more than 6 percent to
the year 2005.
Power generated by Merida III will be sold to Comision Federal de Electricidad
(CFE), the state owned electric utility, under a 25-year purchase power
agreement. The US$231 million project will enable the plant to operate
more efficiently and produce bulk electricity at very competitive rates.
Mr. Vivek Talvadkar, Director of IFC’s Power Department said that Merida
III will serve as a catalyst for increased private sector involvement in
generating electrical power in Mexico at competitive prices. Through its
significant involvement in the first IPP project, he added, Merida III
symbolizes IFC’s commitment to participate in meeting Mexico’s rapidly
increasing electricity demand.
IFC’s financing package includes a loan of up to US$30 million and a syndicated
loan of up to US$74 million for the account of participants. AES Corporation,
one of the largest independent power producers in the world, is the lead
sponsor with 55 percent equity. The other sponsors are Nichimen Corporation
of Japan, one of the world’s leading trading companies, and Grupo Hermes
S.A. de C.V. of Mexico, an industrial group servicing the energy, automotive,
and service sectors. A subsidiary of AES and Nichimen will operate the
The project is consistent with IFC’s strategy of supporting transparent
and competitive private sector participation in infrastructure, and focusing
on structuring and financing demonstration projects in the power sector.
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.