Investment Opportunities
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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