ISA Peru, S.A.

completed

The project company, ISA Peru, was incorporated in May 2001. ISA Colombia, both directly and through its majority ownership of Transelca, S.A. ESP, owns the majority of the shares of ISA Peru. ETECEN, one of Peru''s national transmission companies, is a minority shareholder.The project consists of the engineering, construction, ownership and operation of two high-voltage transmission lines in central Peru under a concession awarded through an international tender in February 2001. The venture is part of the government of Peru''s broader program to expand electricity transmission access, improve the national grid''s stability and overall reliability, and to evacuate power from a new generation facility. Specifically, the project will:link Pucallpa, Peru''s most important town in the Amazon region with a population of about 240,000 people, to the national power grid, thus displacing currently utilized more expensive thermal generation,complete an alternative route for transmitting electricity to Lima and its surrounding areas, reducing technical losses and improving the overall reliability of the national grid system,reinforce power supply to mining centers in central Peru, where demand for power is growing as a result of new mining projects being developed,evacuate power from the Yuncan hydroelectic power plant, a 160 MW generation facility expected to commence operations in late 2002; andprovide the base for the planned expansion of the national interconnected system to the north, thus allowing the grid to reach a larger proportion of Peru''s population and eventual interconnection with Ecuador.The government of Peru has only recently begun to privatize transmission assets. IFC''s support is particularly important to demonstrate that these types of projects can be financed on a project finance basis, a development which has yet to be realized in Peru. Additionally, infrastructure projects require long-term financing. IFC''s presence in this financing will provide comfort to other investors and potential lenders, facilitating the provision of long-term financing at a time when such financing is not easily accessible.