Project detail - ContourGlobal Hydro Cascade CJSC

Who is our prospective customer?

ContourGlobal Hydro Cascade CJSC is an operating hydro cascade with 404.2 MW installed capacity located along the Vorotan River in the Syuniq region of the Republic of Armenia. The Vorotan Cascade is one of the main power generation complexes in Armenia, providing both peak and base load generation and performing grid stabilization services. The Vorotan Cascade extends 178 km along the Vorotan River and its tributaries, and consists of three hydropower plants (HPPs), four reservoirs and a daily regulation pond. In 1970 the Tatev HPP, with 157.2MW installed capacity, the Shamb Reservoir and Dam, plus Daily Regulation Reservoir were commissioned. The Shamb HPP, with capacity of 171MW capacity, and the Tolors Reservoir and Dam were commissioned in 1978. Lastly, commissioned in 1989 were the Spandaryan HPP, with 76MW capacity, the Spandaryan Reservoir and Dam, plus the Angeghakot Reservoir. ContourGlobal acquired these assets from the Government of Armenia in July 2015.

What is our funding objective?

The proposed project is a refinancing of up to USD 150mln for an existing portfolio asset in Armenia, Vorotan Hydro Cascade (“Vorotan”), which is owned and operated by ContourGlobal Hydro Cascade CJSC (the “Company” or the “SPV”). The SPV was established and wholly owned by ContourGlobal (“CG” or the “Sponsor”), an international developer and operator of power generation projects focused on renewable energy with significant presence in emerging markets. Founded in 2005, CG owns and operates a portfolio of 100+ power generation plants in 20 countries across 4 continents, with aggregate installed capacity of over 6.2GW in operation.

Why do we want to fund this investment?

Following extensive refurbishment between 2017 and 2021, as required by the Government of Armenia, the project has been significantly de-risked and the assets have been modernized. This prolongs the lifespan of the project's use and it implies an expected efficiency increase in operations. The refinancing is led by IFC (mandated lead arranger) with FMO and DEG as parallel lenders. The investment is expected to be classified as 100% Green. The new financing is aimed to re-leverage the project's SPV, freeing up cash flows that will a) be up-streamed to the shareholder and directed to ContourGlobal’s new pipeline of greenfield renewable assets in emerging markets, and b) finance the SPV’s CAPEX for 2023-2024. The CAPEX program mostly includes replacement of two power transformers in the Shamb HPP, installation of dams’ monitoring systems, rehabilitation of the Tatev daily regulation pond, and installation of the Early Warning (Alarm) System for communities. No significant construction work is anticipated.

What is the Environmental and Social categorization rationale?

The Project is a brownfield cascade hydro power project with four reservoirs, one daily regulation pond and three hydro power plants, constructed in the 20th century. The FMO E&S Risk category is B+, mostly due to community-security, health and safety risks. Other key risks are on river basin ecosystem services, and contextual situation. The ESG performance is focused on the Environmental and Social Management System (ESMS), the improvement program (electro-mechanical, dams and reservoirs, operational practices and procedures in line with Good International Industry Practice) and stakeholder relations. The applicable IFC Performance Standards are 1, 2, 3 and 4. PS 5 is not applicable as no new land is needed for the project. PS 6 is not applicable due to the brownfield nature of the project. PS 7 is not applicable as there are no Indigenous People in the project area. PS 8 is not applicable as there are no Cultural Heritage items and objects in the project area. The environmental and social action plan (ESAP) was part of the first project finance and has been completed, there is no new ESAP in place.

More investments

Date	Total FMO financing
12/19/2016	USD 65.00 MLN