HQI Transelec Chile, S.A.

completed

Transelec is the primary electricity transmission company in Chile''s central interconnected transmission system (the Sistema Interconectado Central or SIC), which extends over 2,200 km north-south and serves over 90% of Chile’s population. Transelec owns and operates approximately 7,289 km of transmission lines that are supported by 59 substations (of which forty-eight are directly owned by Transelec and whereby the remaining eleven are owned by third parties with a portion of the equipment being the property of Transelec) with a total transforming capacity of approximately 8,000 MVA. Transelec does not own or operate power plants or distribution companies. Several other companies also operate transmission lines in the SIC. The project will support Transelec''s efforts to expand the coverage area of its transmission network and to upgrade certain portions of that network so as to (i) provide access to the grid to new electricity generating plants which are expected to come on line in the near future, and (ii) increase the efficiency and reliability of the company''s transmission system. In addition, the project will support the development of interconnections with other transmission networks in Chile as well as with neighboring countries, thereby fostering improvements in the efficiency and access of the regional electricity market. By supporting Transelec''s investment program, IFC will help ensure the continued growth and development of Chile''s transmission system, which is critical to the development of the country''s entire electricity system. in recent years, investment in Chile''s transmission system has been constrained due to uncertainties to implement a second generation of reforms to the country''s electricity sector laws and regulations. This regulatory uncertainty, combined with the ongoing turbulence in Latin America sparked by the crisis in Argentina, has increased uncertainty for investors in Chile. IFC''s equity/quasi-equity investment in Transelec will help strengthen the company''s capital base so as to enable it to continue to expand access to the country''s electricity grid during this critical period. Finally, IFC''s involvement will support HQI''s and IFC''s mutual goal of sustainable development, and incorporate World Bank Group environmental/social policies and guidelines into Transelec''s operating procedures.