Vorotan Refi

completed

The proposed Project is an up to US$150mn refinancing arranged by IFC for an existing portfolio asset in Armenia, Vorotan hydro cascade (“Vorotan”), which is owned and operated by ContourGlobal Hydro Cascade (the “SPV” or the “Company”). The SPV was established and wholly owned by ContourGlobal Limited (“CG” or the “Sponsor”), an international developer and operator of power generation projects focused on renewable energy with significant presence in emerging markets. Founded in 2005, it owns and operates a portfolio of 100+ power generation plants in 20 countries across 4 continents, with aggregate installed capacity of over 6.2 GW in operation.  The Vorotan hydro cascade is among the main power generation complexes in Armenia, providing both peak and base load generation, and performing grid stabilization services. The 404.2 MW Vorotan hydro cascade is located 240 km southeast of Yerevan in Armenia’s southern Syunik Province. The cascade extends 178 km along the Vorotan River and its tributaries and consists of three hydropower plants (HPPs) and four reservoirs and daily regulation pond:• 76MW Spandaryan HPP, Spandaryan Reservoir and Dam (Embankment type, Mixed Rockfill & Earthfill, 83m dam height), plus Angeghakot Reservoir, commissioned in 1989;• 171MW Shamb HPP, Tolors Reservoir and Dam (Embankment type, Sandy gravel Soil, 69m dam height), commissioned in 1978; and• 157.2MW Tatev HPP, Shamb Reservoir and Dam (Embankment type, Sandy gravel, 41m dam height), plus Tatev Daily Regulation Pond, commissioned in 1970.CG acquired these assets from the Government of Armenia (“GoA”) in July 2015. There are a number of towns and villages spread along the length and breadth of the cascade. The largest of these are the towns of Sisian (population approx. 13,000), which is located on the banks of the Vorotan River in the upper section of the cascade, and Goris (population approx. 23,000), which is located a few km north of the river near the base of the cascade and is where the Company has its offices. Other, smaller settlements spread across the cascade include Gorayk, Tsghuk, Sarnakunq, Angeghakot, Shaghat, Balak, Tolors, Ashotavan, Uyts, Shamb, Ltsen, Tatev and Khot. There is minimal use of the Vorotan reservoirs for social or tourism purposes such as fishing, boating or rafting. Planned releases are made from the cascade’s reservoirs for irrigation purposes. 10% of the Vorotan River[?]’s natural flow is continually released along the river’s original course, with the rest being diverted into the power cascade. The current flow regimes have been in place for several decades and will not be altered by the proposed Project. IFC supported CG in Vorotan’s privatization, first, through equity co-investment in 2015 (IFC exited in 2017) (#33450, Board approved in 2014, the ESRS https://disclosures.ifc.org/project-detail/ESRS/33450/vorotan-hydros) and in 2016 by arranging a US$140mn financing package to refinance the second instalment of privatization (#37652, Board approved on 2016, the ESRS https://disclosures.ifc.org/project-detail/ESRS/37652/vorotan-debt).The new financing is aimed to re-leverage the project SPV, and through doing so free up cash flows that a) will be upstreamed to the shareholder and directed to ContourGlobal’s new pipeline of greenfield renewable assets in emerging markets, and b) finance SPV’s capex for 2023-2024. The capex program mostly includes replacement of 2 power transformers in Shamb HPP, installation of the dams’ monitoring systems, rehabilitation of Tatev daily regulation pond, and installation of the Early Warning (Alarm) System for communities. No significant construction work is anticipated. IFC’s refinancing of Vorotan is expected to have few environmental and social (E&S) impacts, most of which will be positive.