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PARIAC

THE PROJECT

PARIAC is seeking funding, in the form of preferred stock offering or long-term debt (7 years) to finance the expansion of its hydro-electrical generation capacity. Funds will be used to overhaul equipment and to dam the Rajucolta lake. Pariac estimates that $US 5.0 million is the total project cost, US$3.0 millions to purchase the existing power-plant and $US 2.0 millions to fund the modernization effort. Pariac seeks funding in the form of a 7-year loan or preferred stock.

THE COMPANY

Pariac will merge with Cahua, another electricity company. Cahua S.A. will operate the hydroelectric stations. PARIAC expects sales of $0.6 millions in its first year of operation, raising to over $1.0 million by the year 1999. Currently, Pariacīs project is valued at over US$8.7 million.

THE MARKET

In 1992 only 48% of Peruvians had electricity, last among all Latin American countries. So the government adopted emergency policies to foster electricity generation, beginning the privatization process, building new plants, and improving the rate structure for private companies. By 1995, 62.5% of Peru was electrified. Still, the government projects a deficit in electrical capacity for the foreseeable future due to the persistent growth of population and GDP. In the year 2000, Peru will have over a 7,000 KhW energy deficit. Considering the financial limitations of the public sector, it is increasingly important that private enterprises meet Peru's growing energy demands. Moreover, the projects designed to date, will not cover the forecasted demand, so any new electricity generating project should be viable.

PROJECT FINANCING

Cahua (already paid) US$ 3. 0 million

Other investors US$ 2.0 million

Total US$ 5. 0 million

Pariac Expansion Project's Estimated Cash-flow Statement

1997 1998 1999 2000 2001 2002
Sales 647 647 1,192 1,013 1,013 1,013
Expenses 100 100 150 150 150 150
Gross Margin
547

547

1,042

863

863

863
Taxes 0 0 151 103 109 114
Operational Cash Flow
547

547

891

760

754

748
Financing Cost
316

297

298

258

239

220
Financial Cash Flow
231

250

613

501

515

528

 

National Electric Projections for Peru (1995 - 2005)

Year Demand(GWh) Supply(Gwh) Surplus/Deficit(GWh)
1995 17180 17180 0
1996 18211 15208 -3003
1997 19243 15249 -3994
1998 20328 15249 -5079
1999 21502 15249 -6253
2000 22701 15249 -7452
2001 23872 15249 -8623
2002 24944 15249 -9695
2003 26037 15249 -10788
2004 27296 15249 -12047
2005 28555 15249 -13306

Source: The Ministry of Energy and Mines

Relationship between Electricity Demand and the growth factors GDP, and Population

Year Electricity Demand

(GWh)

GDP

(miles of S/.)

Population

(000īs of People)

1995 17180 3913 23008
1996 18211 4226 23468
1997 19243 4479 23890
1998 20328 4725 24320
1999 21502 4986 24734
2000 22701 5275 25154
2001 23872 5565 25557
2002 24944 5837 25965
2003 26037 6053 26381
2004 27296 6265 26803

Source: Ministry of Energy and Mines.


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