The Maritza East III Power Plant

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The Maritza East III plant was an 840 MW (4 x 210 MW), lignite fired facility, located in south-central Bulgaria near the town Stara Zagora. The power plant was commissioned in the late 1970s and accounted for 7% of country’s installed capacity in the 1990s. The aim of the Project was to rehabilitate the plant to improve output and efficiency, to boost output capacity to 900 MW and to extend operating life for at least an additional 15 years. In October 1998, Entergy Power Development Corporation (Entergy), a subsidiary of the US utility Entergy, and Natsionalna Electricheska Kompania (NEK), the Bulgarian state-owned, vertically integrated electricity utility, agreed to create Maritza East III power company AD as a joint venture to own, rehabilitate, and operate the plant. Enel became Entergy’s partner on the project in March 2003 by acquiring 60% of Entergy’s 73% interest in the project for 140 million euro (US$164 million). After that transaction, the joint venture was owned by Enel (44%), Entergy (29%), and Bulgarian NEK (27%). The operation of the power plant was governed by a long-term power purchase agreement (PPA) signed in 2001 with a term covering the duration of the improvement works plus at least 15 years (18 years in total). The total project cost was estimated 650 million euros (US$697.6 million) and was to be covered through senior debt (53%), shareholders contributions (23%), and internal generated cash (24%). A total of 348 million euros in loans were signed in February 2003. EBRD provided loans for 132 million euros; four Bulgarian banks for 75 million euros; and Credit Agricole Indosuez, Societe Generale, Banca Mediocredito, and Bank Austria for 140 million euros. The last loan had MIGA coverage. The project, which was the first private power sector project in Bulgaria and the largest foreign direct investment in the country by 2003, was part of power sector restructuring process which started in 1999. A new energy law was adopted in 1999 and Natsionalna Electricheska Kompania (NEK), the state owned electricity monopoly, unbundled into 7 generating companies, 7 distributing companies, and one transmission company in 2000. MIGA issued a euro 50 million (US$51.1 million) guarantee to Entergy for its euro 111.5 million equity investment in Maritza East III Power Company in 2003. In addition, MIGA issued a euro 233 million (US$238.2 million) guarantee to Societe Generale S.A. of France, in its capacity as Agent for a syndicate of lenders for a euro145 million non-shareholder loan and a euro 25.4 million standby facility, plus interest to the project enterprise. Euro 142.50 million of this exposure was syndicated through MIGA's Facultative Reinsurance Program. The guarantees were for a period of up to 13 years and provide coverage against the risks of transfer restriction, expropriation and war and civil disturbance. In June 2006, Enel acquired 73% in the Maritza East III while the Bulgarian state controlled the remaining 27% share. Subsequently, Italian Enel sold its stake in the Maritza East III power plant in Bulgaria to ContourGlobal LP of the U.S. in July 2011. ContourGlobal LP was to buy Maritza East III Power Holding BV and Maritza O&M Holding Netherland BV, which together own 73% of shares, for 230 million euro. During 2003-2009, the previous sponsors, Enel and Energy, invested 650 million euro,increased the installed capacity of the plant from 840MW to 908MW, and extended its operating lifetime by more than 15 years. http://www.contourglobal.com/portfolio/?id=17