PRIVATE SECTOR FINANCE

The Experience of a Chilean Private Bank in NCRE

Project Financing and the Role of the National
evelop!ent Agenc" #CORFO$
Rodrigo Violic
Banco BICE
100% privately-owned Chilean bank
Rating: BBB+ (Fitch)
~ 3.0% loan arket !hare (" 10 aong #3 bank!)
$otal loan port%olio o% ~ &'( ).1 billion
C*+R ~ 17% %or period #003-#013
$he Chilean ,conoic -evelopent *gency
./blic-!ector organi0ation dedicated to prooting
entreprene/r!hip1 innovation and growth
C2RF23! progra!4%inancial in!tr/ent! !/pport
and %inance a wide variety o% initiative! in key
ind/!trie! o% the Chilean econoy to iprove their
copetitivene!! on a global !tage
5n 6oveber #0081 C2RF2 la/nched a &'( 138.8
illion progra (7C2RF2 6CR, 8oan .rogra9)
aied at providing long-ter1 low-co!t &'- %/nding
to coercial bank! in Chile %or on-lending to 6CR,
.ro:ect!
$he progra wa! %inanced by k%; and the Chilean
$rea!/ry and wa! operational /ntil id #011
.roote the developent o% clean energy pro:ect! in
Chile1 !peci%ically 6CR, and ,,
*llow %or a #0% red/ction in +<+ ei!!ion! below B*&
by #0#01 a! pledged by Chile /nder the Copenhagen
*ccord
Red/ce the co!t o% capital %or low-carbon technologie!
thro/gh conce!!ional loan! (~ #=0 bp! di%%erential with
arket rate! %or the !ae loan d/ration)
,ngage local bank! in cliate %inance by providing acce!!
to long-ter1 low-co!t &'- %/nding eararked e>cl/!ively
to %inance 6CR, and ,, pro:ect! /nder .F !tr/ct/re!
Red/ce4reove barrier! %or deployent o% a diver!i%ied
port%olio o% wind1 photovoltaic1 bioa!! and !all hydro
pro:ect! and allow the co/ntry to eet the goal o% 10%
6CR, in:ection in Chile3! electric grid by #0#?1 according
to the then o/t!tanding law (c/rrently #0% by #0#=)
CORFO NCRE %oan Progra!
Aim and Rationale Access Modality
.ro:ect
Copany
Coercial
Bank!
C2RF2 4 k%;
approves credit
risk, submits info
and requests
access to Program
checks elegibility
and approves loan
Submits info and
loan request to
Commercial Bank
CORFO NCRE %oan Progra!
*cce!! @odality: 2pen ;indow
$ype o% .ro:ect!: 6CR,1 ,, and tran!i!!ion line!
8oan *o/nt: /p to &'( 1= illion per pro:ect
-4, Ratio: a>i/ 8=41=
$enor: /p to 1= year! door-to-door1 %/lly aorti0ing
+race .eriod: /p to 3) onth! (principal only)
C/rrency: &'(
Ba!e Rate: %i> in &'(1 in%ored by C2RF2 on a
A/arterly ba!i! (range between #.0% and 3.7=% p.a.)
Bene%iciarie!: copanie! ('.V!) with %oreca!ted
ann/al !ale! B &'( ?0 illion
2ther %eat/re!: no breakage co!t! in ca!e o% early
repayent
1= 6CR, pro:ect! %inanced %or /p to &'( 138.8
illionC no ,, pro:ect wa! %inanced
13 !all-hydro1 1 bioga!1 1 tran!i!!ion line
*verage tenor: 11.8 year! (loan port%olio)
*verage 5ntere!t Rate: ?.#8% p.a. (range: 3.00% to
=.00% p.a. (Ba!e Rate + *pplicable @argin)
.articipating Bank!: Banco B5C, and BC5
Summary of Terms & Conditions Results
87%
13%
BICE
BCI
Project Technology Capacity Capex Loan Amount Bank Interest Rate Term
Trueno Small hydro 5. !" #S$ 19.8 m #S$ 15.% m &.1% 12.5 yrs
'uayac(n Small hydro 12 !" #S$ 2&.5 m #S$ 15.% m &.9% 1% yrs
!ariposas Small hydro !" #S$ 1.& m #S$ 13.8 m &.33% 11.5 yrs
$ongo Small hydro !" #S$ 17.% m #S$ 12.% m &.2% 1% yrs
Paloma Small hydro &.5 !" #S$ .3 m #S$ 5.3 m &.%3% 8.5 yrs
ST )os )agos Transmission *+ #S$ 7.8 m #S$ 3.7 m 3.%% 8 yrs
Pulelfu Small hydro 9 !" #S$ 2&.5 m #S$ 15.% m 3.7% 12 yrs
)omas )os Colorados Biogas 1& !" #S$ 1.7 m #S$ 8.7 m &.3% 1% yrs
!allarauco Small hydro 3.3 !" #S$ 1%.9 m #S$ 9.3 m &.8% 15 yrs
,-o .uasco Small hydro &.3 !" #S$ 1%.5 m #S$ 8.9 m &.% 15 yrs
)a +rena Small hydro 3 !" #S$ 12.8 m #S$ 9.% m &.2% 1&.5 yrs
El Canelo Small hydro .1 !" #S$ 11.5 m #S$ 8.7 m &.2% 15 yrs
+llip/n Small hydro 2. !" #S$ 8.5 m #S$ .8 m &.2% 15 yrs
!uchi Small hydro %.8 !" #S$ 2.7 m #S$ 1.& m 3.9% 8.5 yrs
)as 0lores Small hydro 2 !" #S$ 9.& m #S$ .5 m 3.% 15 yrs
Total 79 MW !" #$$ m !" %&9 m A'erage ( )*#+, %%*+ yrs
CORFO NCRE %oan Progra!
%e&&on& %earned
'trong intere!t in the .rogra %ro .ro:ect -eveloper! b/t liited
engageent with Coercial Bank!: only # o/t o% #3 bank! participated in the
.rogra.
.o!!ible rea!on!: !i0e o% pro:ect! not attractive %or larger bank!C gap! in
.ro:ect Finance !kill! and capacitie! within !aller bank!C perceived
cople>ity o% working with p/blic entitie!4@-B!C lack o% con%idence in
developer! who are newcoer! to the energy !ector1 etc.
1
*ttracting intere!t %ro bank! in %inancing non-hydro 6CR, pro:ect! and
energy e%%iciency pro:ect! proved to be e>treely di%%ic/lt.
.o!!ible rea!on!: in the ca!e o% non-hydro 6CR, pro:ect!1 ri!k! a!!ociated
with low-carbon technologie! !/ch a! wind and !olar relatively /nknownC in the
ca!e o% ,, pro:ect!1 co!t-!aving inve!tent! !eeed le!! attractive to %inance
than ca!h %low generating a!!et!C !all tran!action !i0e4high tran!action co!t!C
di%%ic/lty to ea!/re e%%iciency per%orance.
#
Fir!t over advantage allowed Banco B5C, to be perceived a! arket leader
in pro:ect %inancing to the renewable energy !ector in Chile.
2ther coercial bank! %ollowed !/it1 rein%orcing their .F tea! and !tarted
to %inance !all-hydro pro:ect! in #011.
C/rrently1 near one third o% all bank! operating in Chile are actively involved in
the %inancing o% 6CR, pro:ect!1 incl/ding wind1 photovoltaic and !all-hydro.
3
BICE'& NCRE PRO(ECT PORTFO%IO #)**+,)*-.$
Central .idroel/ctrica
Puclaro
5*+ MW
#008
)*7 MW
#008
5*- MW
#009
%# MW
#009
- MW
#009
Central .idroel/ctrica
El !an1ano
Central .idroel/ctrica
Trueno
Central .idroel/ctrica
'uayac(n
Central .idroel/ctrica
!ariposa
)*5 MW
#009
- MW
#010
&*& MW
#010
-*+ MW
#010
Central .idroel/ctrica
)a Paloma
Central .idroel/ctrica
$ongo
Central .idroel/ctrica
!allarauco
Central .idroel/ctrica
)a +rena
Planta Biog(s
)oma )os Colorados
%) MW
#010
)*& MW
#011
+ MW
#011
& MW
#011
Central .idroel/ctrica
,-o .uasco
Central .idroel/ctrica
*alcas
Central .idroel/ctrica
Callao
#*- MW
#011
-*% MW
#011
Central .idroel/ctrica
+llip/n
Central .idroel/ctrica
El Canelo
$*+ MW
#01#
Central .idroel/ctrica
!uchi
%# MW
#01#
# MW
#01#
Comple2o .idroel/ctrico
Bonito
Central .idroel/ctrica
)as 0lores
.I"R/0L1CTRICA
LA! 2L/R0!!*A*
&- MW
#013
)- MW
#013
Parque E3lico
San Pedro
Parque E3lico
Totoral
&*# MW
#013
Central .idroel/ctrica
El $iuto
9 MW
#01?
- MW
#01?
Parque E3lico
,aki
Parque E3lico
.ua2ache
& MW
#01?
Central .idroel/ctrica
!ulch/n
&*# MW
#01?
Centrales .idroel/ctricas
!unilque 1, !unilque 2
y Bureo
PM3" BI/ BI/
403R0T0 !*A*
D#= .ro:ect!
~ #10 @;
5n!talled Capacity
'all <ydro1 ;ind E
Bioga!
D&'( =00 illion
coitted
100% .ro:ect Finance
T/AN0 1O2