Electro Norte Medio

cancelled

The holding company Jose Rodriguez Banda SA (Jorbsa) won the tender Electro Norte Medio (Hidroandina), the electricity distribution company in the departmentos of La Libertad and Ancash in Nov. 25, 1998. Jorbsa won by offering US$67.8 million for a 30% stake in Electro Norte Medio, the highest bid. The tender included restrictive bidding rules, which aimed at keeping ownership of the utilities in Peruvian hands. The government also offered special financing terms to local companies for the acquisition: 10% down, with the remainder payable over 12 years with a three-year grace period. The privatization scheme obliged Jorbsa to acquire an additional 30% shareholding in the company, after the first year of operations. The privatization scheme also included a 10% stake to be offered to employees, and a 30% stake to small local investors through Peru's citizen participation program. Electro Norte Medio was one of the four regional electricity distribution companies in the northern and central which were partially privatized under such privatization scheme in Nov 1998. The other three were Electro Norte, Electro Noroeste, and Electro Centro. Jorbsa also won the tender for these three companies. Electro Norte Medio had 140,000 customers in 1998. Jorbsa committed to reduce system losses by 25% in each of the first two years of operation, and to administer whatever rural electrification programs the government would carried out in the systems' service territories. In 2001, Jorbsa surrender its ownership stake in the four regional companies to the government after failing to raise sufficient financing the purchase of an additional 30% stake. Jorbsa agreed to give up its ownership interest so the companies could be re-privatized. The government attempted to sell the four regional distribution companies in 2002 and decided to suspend the process indefinitely. Jorbsa was perceived as a good manager during its three-year ownership term, slashing technical losses and reversing the utilities financial losses to realize a $12-million profit in 2000. During Jorbsa's tenure, customer numbers rose from 839,000 to 1 million, and sales grew to 1,763 GWh in 2001 from 1,527 GWh in 1998. None None