TermoAndes SA

distressed

TermoAndes SA was created to build and operate a 632.7-MW combined-cycle natural gas-fired generating facility in the Salta province of Argentina. TermoAndes was an Argentinean subsidiary of Gener (Chilgener) of Chile, which was 50% owned by the AES Corporation of the US. The power plant was scheduled to start commercial operation in the first semester of 2000. The total project cost was US$230 million, financed with an 10-year syndicated loan arranged by Deutsche Morgan Grenfell and Banco Bilbao Vizcaya (the total loan amounts to US$314 million, granted to finance TermoAndes project and InterAndes project, a transmission line project also undertaken by Gener). A consortium comprised of Abengoa S.A. and Siemens AG were awarded the turnkey construction contract for the plant and commenced construction in August 1997. TermoAndes entered into long term supply contracts with two mining companies, Zaldivar and Lomas Bayas, in the SING (Integrated System of the Great North), for a total of 110 MW of capacity to be supplied by the project. They also expected to use a portion of the energy to meet existing contractual obligations with other clients in the SING and to sell a portion of the remainder in the spot market. TermoAndes received its final operating approval from the Argentinean government in December 1999. In 2002, AES Corporation filed legal proceedings with an international arbitration tribunal (International Centre for Settlement of Investment Disputes - ICSID) against the Argentinean government. The proceeding seeks compensation for losses incurred by the company at the time of the devaluation of the Argentinean currency. In addition, Gener was in the process of restructuring the debt of its subsidiaries TermoAndes S.A. and InterAndes S.A.. as of 2009, the project was still distressed under ICSID proceeding.