Termoelectrica Jose de San Martin

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Termoelectrica Jose de San Martin was an 830 MW natural gas power planted slated for construction in Timbues, Santa Fe province, and was to sell its electricity to Argentina’s wholesale market. The power plant was owned by Termoelectrica Jose de San Martin SA, a consortium of private generators led by Total SA. The power plant had an estimated cost of US $548 million and was developed as part of the federal government’s strategy to ensure that capacity expansion was sufficient to meet the growing electricity demand in the country. Financing for construction was provided by three sources: the Foninvemem trust fund, a 3% tariff increase for large and medium-sized users over five years, and banks and pension funds. If those sources were insufficient, then the Argentine government was to cover the difference. In 2004, the Argentine government created Foninvemem as a fund to finance private investment in generation capacity and prevent future energy crisis. Foninvemem was financed with wholesale power revenues owed to generators. If a company participated in Foninvemem, they would give up 65% of the credits that accrued from 2004 through 2006, but they would receive ownership rights in any projects built with Foninvemem resources. In 2005, Endesa, which represented 72% of Argentina’s generating capacity in 2005, and 21 other power generation companies agreed to participate in Foninvemem in exchange for government increases in wholesale power prices through 2007. In 2006, Foninvemem had approximately US $450 million available to build Termoelectrica Jose de San Martin and Termoelectrica Manuel Belgrano. The latter plant was also designed under the same scheme as Termoelectrica Jose de San Martin. Ownership rights in Termoelectrica Jose de San Martin were granted in proportion to the Cammesa credits accrued in Foninvemem of each private generator. The major shareholders of both plants included Endesa, Total, AES, Petrobras, EDF and Duke with Endesa as the dominant partner in Termolectrica Manuel Belgrano SA and Total as the dominant partner in Termoelectrica Jose de San Martin SA. In November 2006, the Argentine government signed a turnkey contract with Siemens Power Generation (PG) for the construction of both Termoelectrica Manuel Belgrano and Termoelectrica Jose de San Martin. A 10 year service contract for the operation and maintenance was also awarded to Siemens for when the plant was to become operational. With the turnkey contract, Foninvemem funding and the government’s guarantee to cover additional construction costs, Termoelectrica Jose de San Martin was securely financed in November 2006. Operations commenced in 2008.