Hidropastaza S.A.

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Construtora Norberto Odebrecht of Brazil received a $150 million MIGA guarantee for its loan guaranty to BNDES (Brazil's national economic and social development bank) for its loan to Hidropastaza S.A. The guarantee covers the risk of breach of contract, with an additional amount is to be covered under the Cooperative Underwriting Program. The project involves the construction and operation of a run-of-river hydroelectric plant, called San Francisco Hydroelectric, southeast of Quito. The 230 MW power plant will be located almost entirely underground, with water from a nearby river fed to generators via an underground tunnel. Electricity generated at the plant will be sold either on a spot basis in Ecuador or through short-term purchase agreements with public and private organizations. The hydroelectric project is expected to significantly help the country's power sector expand its capacity, leading to a reduction in the average energy price in the wholesale market and helping to alleviate current bottleneck problems. The project will play a pilot role in the sector's privatization. Major savings will result from the plant as the energy will substitute for expensive fossil fuel imports. Moreover, the project will have a positive downstream effect on industries heavily dependent on power, such as cement plants and steel mills. The project is expected to give priority to the use of local labor, infrastructure, and services during construction. Hidropastaza will generate about 1,500 jobs during the construction phase and approximately 70 local permanent positions thereafter. Employees will receive extensive training, both in Brazil and Ecuador, using advanced technology. Over the first five years of operation, an estimated $27 million will accrue to the government in the form of taxes and dividends.

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