Project detail - VIENTOS DE ELECTROTECNIA S.A. DE C.

Who is our customer

Vientos de Electrotecnia S.A. de C.V. (VESA) is a special purpose company incorporated in Honduras for the development of the San Marcos wind farm. VESA is owned by Grupo Terra, one of Central America's most experienced players in energy and infrastructure. Grupo Terra invited FMO to be the mandated lead arranger for this wind farm project

What is our funding objective?

FMO will finance the development and construction of a 25% extension to the operational 50MW wind farm in San Marcos de Colon in Honduras. Upon completion of the extension, expected for 2019, this wind farm will in total generate 186-215 GWh of energy per year while reducing and replacing non-renewable energy sources in Honduras.

Why do we fund this investment?

The project has high developmental impact as it will provide renewable energy capacity to a country heavily dependent on fossil fuel-based energy. Honduras' installed capacity is around 2,000 MW, of which about 60% is non-renewable. FMO's involvement in the financing of this project is additional because, next to our own loan, we have catalyzed long-term USD financing from other lenders, which matches the long-term nature of this type of investment.

What is the Environmental and Social categorization rationale?

This is a category B+ project with potential limited adverse social and environmental (E&S) risk and / or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures. While this project has been screened against all Performance Standards, FMO’s E&S due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS 1 - Assessment and Management of Environmental and Social Risks and Impacts PS 2 - Labor and Working Conditions PS 3 - Resource Efficiency and Pollution Prevention PS 4 - Community Health, Safety and Security PS 6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources The following performance standards do not apply to this project: - PS5 - Land Acquisition and Involuntary Settlement - VESA does not have legal rights to carry out expropriation. Land was leased for the wind farm expansion through a negotiated settlement approach. - PS7 - Indigenous Peoples - There is no record of presence of indigenous peoples in the direct or the indirect area of the project. This finding is based on firstly, the national census that did not record any indigenous populations neither in Apacilagua nor in San Marcos de Colón. Secondly, project documentation and site visit observations during the development and construction of the first phase (VESA 1) found that there were no indigenous peoples. - PS8 - Cultural Heritage - An archaeological inspection was carried out that found no archeological remains or artefacts. A Chance Finds procedure will be implemented. FMO will periodically review the project’s ongoing compliance with the Performance Standards.

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Date	Total FMO financing
11/22/2013	USD 42.50 MLN