Golar Power Reaches Financial Close in Brazil
Bermuda-registered Golar LNG said April 19 that its 50-50 joint venture with New York fund Stonepeak Infrastructure Partners, Golar Power, has reached financial closing on the 1.5-GW Sergipe-1 gas-fired power project in Brazil. The project, in the northeast, will be the largest and most efficient thermoelectric power plant in Latin America/Caribbean upon completion, it said.
This follows key agreements reached late 2016, including on a long-term LNG supply contract to the venture.
Centrais Eletricas de Sergipe (or Celse), the project company equally-controlled by Golar Power and privately-owned Ebrasil, will receive $1.34bn under a non-recourse project financing structure, proceeds from which will be used to fund the project's remaining capital expenditures includin: the plant itself; a dedicated 34-km, 500-KV high-voltage transmission line, and associated gas pipeline and mooring infrastructure for the integrated LNG import terminal facility.
Estimated total project capex, including taxes and financing costs, is estimated at $1.74bn. Of that, the total equity contribution of some $400mn has been fully paid-in and includes $123mn in cash reserve accounts pre-funded by the project sponsors. Golar's statement added that the power project will generate forecast pre-tax earnings (Ebitda) of $323mn/yr at current exchange rates, prior to any dispatch. The power plant's commercial launch is scheduled for January 1, 2020. Payments under the executed power purchase agreement (PPA) are inflation-indexed and allow for pass-through of fuel costs.
Golar Power CEO Eduardo Antonello said: "This innovative financing represents a key milestone in the development of Golar Power infrastructure projects globally, establishing a precedent for financing in local currency in support of projects receiving revenues in local currency which are adjusted based on inflation. The project bond issuance has attracted the interest of multiple international investors."
In connection with the project's financial close, Golar Power has executed final agreements with Celse to charter the Golar Nanook, a fully customised new-build 170,000m3 floating storage and regasification unit (FSRU) for 26 years, from 2020 to 2045, to serve as the import terminal, from which Golar Power expects to receive Ebitda of roughly $41mn/yr indexed to the US consumer price index, plus any upside from capacity in the FSRU not used by the project. Golar Nanook was built in December 2017 at the Samsung Heavy Industries shipyard in South Korea and can regasify up to 7.5bn m3/yr.
The new terminal "has the potential to unlock future LNG distribution opportunities into Brazil," added Golar LNG.
In late 2016, a new joint venture of Qatar Petroleum and ExxonMobil, called Ocean LNG, signed its first-ever long-term LNG supply contract: to Celse starting 2020, for use at the Sergipe power project, Brazil. Celse took the final investment decision to develop the 1.5-GW power venture in October 2016.