America: Guascor Do Brasil Ltda. (Brazil)

Sponsor: Guascor, S.A.
Activity: Electric power plant construction and operation
Industry: Energy
Product: Joint venture loan to the project company
Total investment: 9.5 million euros
Resources: FIEX

Brazil’s geography, size, low population density and imbalances between the areas where power is produced and where it is consumed hinder the universal delivery of electric power and raise the cost of supplying electricity to the country’s most secluded regions.

With a population of around nine and one half million and an average density of under six inhabitants per
km2, the states of Pará, Rondônia and Acre in northern Brazil, one of the country’s least developed areas, needed alternatives to narrow their energy deficit. To meet this need, GUASCOR DO BRASIL Ltda. (GBL), a subsidiary of the Spanish company GUASCOR S.A., was awarded a series of franchises in 1997 to supply the farthest outreaches of the aforementioned states with electric power using Diesel facilities. This project, generically denominated the NORTH ENERGY Project, was initially financed by the Inter-American Development Bank and Spain’s Official Credit Institute, among others.

Until that time, electric power was only available in secluded areas for six hours a day, at a very high cost and with frequent outages. GBL enlarged the installed capacity with motors designed and made specifically for this project, increasing the time and quality of power supply. The company set up 267 generator sets for a total installed capacity of 125 MW, delivering 24-hour power to 68 towns with a combined population of nearly two million. Beyond the 408 jobs created during installation and maintenance operations, the region’s standard of living has improved perceptibly because the new source of energy has enhanced the development potential of micro and small companies. In addition, access to refrigeration has improved the local population’s health and diet, and electronic equipment can now be used in schools.

In 2008, in response to the rise in industrial activity in the area, GUASCOR approached COFIDES with a project to expand electric power generation in Pará and Rondônia and replace part of the existing generator park. Together, this would entail the manufacture by the sponsor of a total of 36 new generators, 31 to replace obsolete equipment and five to raise the installed capacity to 172 MW. The total investment in this project amounted to 9.5 million euros, 65 % of which, i.e., 6.15 million euros, was financed by COFIDES as a joint venture loan drawn from Fund for Foreign Investment (FIEX) resources.

Thanks to its involvement in the GUASCOR project in Brazil, COFIDES has contributed to the consolidation of the sponsor’s internationalization process undertaken in 1997. Moreover, the company is participating in an endeavour whose financial viability ensures its sustainability over time and which has a powerful impact on local development in several of the country’s less developed areas. In addition, it has created fifty direct jobs, primarily held by local staff trained by GUASCOR.

Lastly, the NORTH ENERGY Project is highly regarded by both Brazilian public institutions and multilateral organizations. In 2008 ANEEL (Brazilian regulatory agency) awarded GBL a prize for the design and development of energy efficient, low fuel generators. Founded in 1966 and headquartered at Vitoria, Spain, GUASCOR is an industrial group with a prominent world-wide position in the design, construction and operation of power plants in isolated areas and also engages in co-generation, mini hydroelectric stations, development and operation of wind farms, biomass, livestock waste management, recovery of energy from used oil and refuse dumps and so on.