MIGA Insures Investment in Bulgarian Power Project (English, Bulgarian)
MIGA Insures Investment in Bulgarian Power Project
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WASHINGTON, DC, December 20, 2005—The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, today issued €99 million in political risk insurance for the construction and operation of a power plant, AES Maritza East 1, near Galabovo, Bulgaria. The guarantees cover €89 million in principal and interest on loans syndicated by Calyon of France, and a €10 million equity investment by AES Bulgaria Holdings BV, which is wholly owned by The AES Corporation of the US. The guarantees extend up to 16 years, and protect against the risks of expropriation (loans only) and war and civil disturbance (loans and equity).
As part of its steady progress toward a competitive market economy, Bulgaria has overhauled its power sector, privatizing distribution, certain generation assets, and restructuring the state-owned grid operator, NEK. Private-sector led generation projects such as AES Maritza East 1 are an integral part of the country’s energy sector reform.
With total costs estimated at €1.1 billion, the project represents a major foreign direct investment for Bulgaria. The project involves the financing, construction, and operation of a new 600 MW (net) lignite-fired power plant. The project will generate electricity using lignite coal extracted from the nearby Maritza East mines. The new plant will help satisfy future demand for electricity in Bulgaria, where upcoming accession into the European Union and economic growth are reinforcing the need for reliable, efficient, and environmentally compliant sources of electricity.
“This new power plant is part of the critical infrastructure that will underpin Bulgaria’s economic growth,” said Yukiko Omura, Executive Vice President of MIGA. “At the same time, it represents an opportunity to make the most of a significant natural resource in an environmentally responsible manner, while directly creating new jobs in a region that needs them.”
The project is expected to generate significant job opportunities. During the construction period, the project will employ close to 2,000. Once operational, the plant will require up to 250 full-time workers, most of whom will come from the local and regional workforce.
Local companies are expected to benefit from the project as well. As the plant’s primary supplier, the Maritza East Mines, a major source of employment in the region, will have a more certain future, as will the company’s 8,000 workers.
The new AES Maritza East 1 plant also represents a new generation of environmentally compliant, efficient power facilities. Key features of the new plant include:
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Wet-limestone flue gas desulfurization
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High-efficiency electrostatic precipitators
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Low oxides of nitrogen (NOx) burners to meet EU and
World Bank standards.
The plant is expected to be fully operational in 2009.
The signing of the agreement paves the way for syndication of long-term commercial bank funding, which the arrangers said was dependent on MIGA’s involvement. MIGA’s insurance complements support from the European Bank for Reconstruction and Development in the form of A and B loans, guarantees from Coface and Hermes, and local and international commercial banks. The project is the second investment in Bulgaria’s power sector to be supported by MIGA.
“We are pleased to play an important role in helping Bulgaria implement its reform program as it moves closer to its goals of EU accession, enhanced environmental stewardship, and economic stability,” said Omura.
For information
Angela Gentile, agentile@worldbank.org,
t. 202.473.3509