Yuncan Hydroelectric Plant

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In February 2004, Peru's government signed a 30-year lease contract for the 130-MW Yuncan hydroelectric project with EnerSur, the local subsidiary of Belgian energy company Tractebel, which was in turn owned by the French company Suez. The project had been repeatedly delayed due to protests in the Pasco region where the plant was to be located. The total estimated investment in the project was about US$262 million, of which the Japan Bank for International Cooperation (JBIC) was financing 75% and the Peruvian government 25%. State power company Empresa de Generacion de Energia Electri ca del Centro SA (Egecen) was building the plant but had to stop work in April 2003 after the government ran out of cash to finance its 25%. The state turned to the private sector to help cover the remaining construction costs of the project. Work restarted in June 2003 and the plant was 85% complete towards the end of 2004. Egecen was scheduled to transfer the project to EnerSur upon completion of construction and tests in June 2005. EnerSur paid a total of US$205 million for the 30-year lease contract for the plant. This was composed of US$57.6 million upfront contract right to be paid in full by July 30, 2005, as well as US$124.5 million use right to repay the debt contracted by the Peruvian state to the JBIC and US$23 million for the Pasco Department Social Contribution. The latter two payments were to be paid over 17 years to the government on a semiannual basis. In May of 2004, Tractebel paid the first US$27.06 million installment for the contract. The state guaranteed a refund of the advanced payments if the contract was rescinded for failure to deliver the plant within the maximum term established. EnerSur was the only bidder for the project after the other pre-qualifiers, Norway's state power company Statkraft and US-based PSEG, declined to take part in the auction. Under the usufruct agreement, EnerSur had the exclusivity to operate the plant and sell the energy it generated, most of which was to be supplied to the wholesale market. Yuncan was powered by the Paucartambo and Huachon Rivers. The catchment area was greater than 1,300km², and the reservoir's total volume was 63,000m². The project involved the construction of two intake dams (one floating, one concrete-gravity), a 29km waterway and a 130MW underground Hydroelectric Center that was to use three 44.5-MW generators. There was also to be 50km of 220kV transmission lines and associated substations between Yuncan and Carhuamayo to connect to the national grid. In February 2006, the power plant was commissioned and commenced operations. None None