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Friday, 18 April 2014

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PFI Issue 155

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  • A Banker's View

    PFI Issue 155

    PFI - A banker's view PFI's August 26 edition (issue 151) contained a review of UK Private Finance Initiative projects which had reached financial close over the summer months. The article "UK PFI goes into orbit" chronicled the completion of 14 separate deals worth more than o1.6bn. It was a remarkable (and exhausting) period, all the more striking for the fact that the frenzy of activity coincided with the drastic reduction in work on new global project finance mandates. However, the question remains

  • A lulu of a deal

    PFI Issue 155

    USFilter has been selected to finance, design, build and operate a wastewater facility in Honolulu, Hawaii. The water reclamation plant will process 13m gallons of water per day and is estimated to cost US$140m.

  • A phone and power update

    PFI Issue 155

    No mandate is believed to have been given yet on the StarHub financing (see last issue p21). Market talk, however, indicated that the Citicorp/DBS-led consortium is leading the pack, with surprising rumours that ABN AMRO is also a favourite with its sole bid.

  • A smaller Berts

    PFI Issue 155

    A scaled-down version of the Bangkok Elevated Road and Train System (Berts) project was approved by the cabinet recently, paving the way for the State Railway of Thailand (SRT) to start preparations for construction. The cabinet also gave the green light for a consultant to be appointed to conduct a detailed feasibility study on the project.

  • A trans-Pantagonian line

    PFI Issue 155

    The Argentinean government is contemplating building a railway that would link the Argentinean ports in the Pantagonia region. The cost for the first stage of construction, which should last two years, is estimated at US$400m. The length of the railroad could reach 1,100km, depending on how the government decides to structure the project.

  • Abednego part-stake sold

    PFI Issue 155

    Sydney investor Rene Rivkin has sold his 13% interest in a A$64m takeover target Abednego Nickel to Anaconda Nickel (PFI issue 154).

  • ABN wins Heartlands

    PFI Issue 155

    ABN AMRO has been appointed sole arranger for Heartlands Power Ltd's (HPL) 98MW, £45m gas-fired plant at Fort Dumlop near Birmingham. The deal is likely to be syndicated early next year.

  • AES buyout halts

    PFI Issue 155

    Hanwha Energy Co has terminated negotiations to sell a stake in its 1,500MW IPP plant to AES Corp after both parties failed to come to an agreement on conditions for sale.

  • AES makes it formal

    PFI Issue 155

    The AES Corp has formally signed a shareholders' agreement with the state government of Orissa to acquire a 49% share in the Orissa Power Generation Corp (OPGC) for approximately US$144m. OPGC owns and operates a 420MW mine-mouth coal-fired power station in the state.

  • AGRA pipe gets the nod

    PFI Issue 155

    AGRA announced that its Houston, Texas-based pipeline construction subsidiary, US Pipeline, has been awarded two new pipeline construction projects, together valued at approximately US$35m.

  • AIOC to decide

    PFI Issue 155

    The IFC, EBRD and Lazard Brothers were still considering as PFI went to press whether to proceed this month with syndication of US$400m of B loans for five members of the Azerbaijan International Operating Company (PFI issue 152 p36).

  • Airport sale postponed

    PFI Issue 155

    Initially scheduled for October 28, the date to receive proposals to acquire concessions at the Juan Santa Maria airport has been postponed to November 16.

  • Alto Piura for sale

    PFI Issue 155

    The bidding rules for the Alto Piura Hydroelectric plant project are scheduled to be approved by the Peruvian government on October 27, the company's president has declared.

  • And more peaking

    PFI Issue 155

    Western Resources is expanding the company's Gordon Evans Energy Center, north-west of Wichita, Texas, through the construction of three new gas-fired combustion turbines.

  • ANZ for Bakri

    PFI Issue 155

    ANZ Investment Bank has been appointed arranger on a US$77m structured financing for the Bakri Group. The money will be used to build two 45,000dwt chemical tankers for use by Sabic over a 10-year period. The money will go into a special purpose vehicle.

  • Apache

    PFI Issue 155

    Private finance brought in to fund UK armed forces In a major public-private partnership project, the UK's armed forces are introducing a new generation of weapons and systems. Trevor Sturmy from Deutsche Bank outlines how the Private Finance Initiative has been used in the Ministry of Defence's Apache helicopter training project. UK PFI APACHE As outlined in the Strategic Defence Review, the UK armed forces are in the process of introducing a new generation of weapons and other key systems that will b

  • AWW flows uphill

    PFI Issue 155

    American Water Works announced that an agreement in principle has been reached to acquire National Enterprises (NEI) in a deal valued at US$700m.

  • BA high-speed train

    PFI Issue 155

    The government has announced it is thinking about selling the rights to build a high-speed train between Buenos Aires and the Ezeiza International airport, located at about a 45-minute drive from the capital. An auction to sell the rights for the train to a private company should take place in 1999, with work on the project to start as early as 2000. The construction of this railway is part of a larger plan, which is also considering expanding highways and the existing subway line in an attempt to bett

  • Barge runs aground

    PFI Issue 155

    Smith Cogeneration's Rs800 crore 170MW barge-mounted power project in Karnataka is now expected to be relocated after the company encountered various environmental problems. The state government is now looking into acquiring a suitable alternative site for the project.

  • Bass shortlists

    PFI Issue 155

    Five bidders have been shortlisted for the design, construct and maintain (DCM) contract to upgrade the Bass Highway (PFI issue 143). They are: Boral Resources (Tasmania) Limited;

  • Beijing mulls Rmb3bn plans

    PFI Issue 155

    More municipalities and provinces have announced infrastructure programmes as part of the nationwide move to boost investments to sustain economic growth. Among them is the Beijing municipality, which said it hoped to receive some Rmb3bn from the government for 17 infrastructure projects in the city.

  • Bhadravati has coal clearance

    PFI Issue 155

    Sponsors Electricite de France (EdF), GEC-Alsthom and Ispat Group have received approval from the defence ministry for the development of a coal mine to supply its proposed 1,082MW coal-fired power project at Bhadravati, Maharashtra (PFI issue 151). The project developers have already received the central government counter- guarantee.

  • Bitter confrontation in IPP row

    PFI Issue 155

    Hub Co is said to have begun legal action against the Pakistani government for its insistence that the company was involved in corrupt practices in obtaining its power contract (PFI issue 154). The suit, if successful, could force the government to purchase equity in Hub Co to the tune of US$400m and reimburse shareholders for lost profits.

  • BPCL seeks EPC

    PFI Issue 155

    Bharat Petroleum Corporation (BPCL) has called for tenders from international EPC contractors for its proposed 6m tpa oil refinery at Bina, Madhya Pradesh. The two contracts - one for setting up a refinery and another for pipelines - will each be worth around Rs2,000 crore.

  • Bravo bids received

    PFI Issue 155

    Nine bids have been presented to design, finance and build the 450MW Rio Bravo thermoelectric power plant, located in Mexico's northern Tamaulipas state, according to the Federal Electricity Commission (CFE).

  • CalEnergy disputes continue

    PFI Issue 155

    A legal suit by Boart Longyear has been filed against CalEnergy for non-payment of US$1.3m, coinciding with an announcement by a group of 23 Indonesian contractors that they had failed to resolve disputes with the US developer.

  • Canal Plus goes digital in Spain

    PFI Issue 155

    Morgan Stanley closed the financing for one of Spain's largest ever media deals earlier this year. Canal Satelite Digital (CSD), Spain's first digital TV project, attracted huge attention from banks and closed oversubscribed. By Julie Carr.

  • Carolina to expand

    PFI Issue 155

    Carolina Power & Light is looking to build some generating facilities following its agreement to supply North Carolina Electric Membership Companies with 800MW of peaking capacity beginning in 2001.

  • CED funds wind

    PFI Issue 155

    La Compagnie Ecolienne du Detriot (CED) is putting together a US$60m project financing for its 50MW wind farm project just south of Gibraltar. Credit Agricole Indosuez is arranging the loan, which is backed by the European Investment Bank (EIB) and French bilateral Proparco.

  • Centretel shift

    PFI Issue 155

    The pricing on the DM600m loan that SG and Bankers Trust are mandated to arrange for DCS 1800 licensee Centretel will now have to be increased to sell the deal to the market.

  • CERJ bridge refinanced

    PFI Issue 155

    The Brazilian utility company Companhia de Electricidade de Rio de Janeiro (CERJ) has refinanced its US$350m bridge loan, scheduled to mature on October 6.

  • Citipower in the limelight

    PFI Issue 155

    Speculation on the sale price Citipower is likely to attract has been rife in the market, with one of the front-runners Singapore Power rumoured to be bidding between A$1.2bn and A$1.6bn (PFI issue 154). Bankers, however, have said that the bid range was reasonably fair, considering Entergy had paid the Victorian government A$1.575bn for the utility in December 1995. Also, the utility is said to carry residual regulatory risks.

  • CLESA gets lift

    PFI Issue 155

    The Salvadorian electricity distri- butor Santa Ana Electric Light Company (CLESA), has plans to invest US$10m in the next two years in electricity infrastructure, to expand its network and to eliminate energy supply fragilities.

  • CMS buys Lakewood

    PFI Issue 155

    CMS Generating has agreed to acquire Consolidated Natural Gas's 35% interest in the 236MW gas-fired cogeneration plant in Lakewood, New Jersey. The move will increase CMS's holding to 80% from 45%. The remaining 20% is owned by Tomen. The sale price was not disclosed.

  • Coelba & Light eye refinancing

    PFI Issue 155

    Two of the nation's electric power distributors are considering refinancing unhedged dollar-denominated bridge loans, even as the current global economic crisis has taken a toll on the Brazilian economy.

  • Cofetel awards licences

    PFI Issue 155

    Mexico's telecommunications regulator Cofetel has handed over six licences for concessions to operate local wireless fixed and mobile telephony throughout the country.

  • Connect Austria - Rarity value

    PFI Issue 155

    Earlier this year, Connect Austria, one of the country's largest private infrastructure projects in recent years, secured non-recourse funding of US$500m for its mobile phone network. The deal, rare for the Austrian project finance sector, was more than 30% oversubscribed. By Julie Carr.

  • Contrina gets contract

    PFI Issue 155

    Contrina, the multinational engineering and construction consortium, was awarded a US$750m turnkey contract to design and build extra heavy crude oil facilities and associated utilities and off-sites at Jose, near Puerto la Cruz.

  • Cottbus syndicated

    PFI Issue 155

    The 17-year project loan for the Cottbus lignite-fired 74MW and 120MW power project in eastern Germany has been syndicated by Bayerische Hypo und Vereinsbank.

  • Cronulla chugs at it

    PFI Issue 155

    Sydney Water has confirmed that four pre-qualified tender bids to upgrade the Cronulla sewerage treatment plant to tertiary level have been accepted. The participants are:

  • CTRL out

    PFI Issue 155

    The final structure of the bank debt for the first phase of the Channel Tunnel Rail Link project has been decided.

  • Doubts on Norsk

    PFI Issue 155

    There are growing fears the Norsk Hydro aluminium smelter project will be cancelled, with the company concentrating on a similar project in Trinidad & Tobago instead.

  • Duquesne swaps plants

    PFI Issue 155

    Duquesne Light Company and FirstEnergy have agreed to exchange interests in several power generation facilities. The companies hold joint interests in eight generating units and under the agreement, the interests of each company will be consolidated.

  • Edison mimics USGen

    PFI Issue 155

    Edison Mission Energy has set up a bank meeting for early November to secure funding for its US$1.8bn acquisition of the Homer City power plant in Pennsylvania.

  • Egat mulls fund-raising

    PFI Issue 155

    The Electricity Generating Authority of Thailand (Egat) plans to raise another Bt14.6bn of funds from domestic banks next year, following the successes of recent fund- raising exercises.

  • Egco/CLP eyes another unit

    PFI Issue 155

    Electricity Generating Co (Egco) will team up with CLP Holdings to bid for the Ratchaburi power plant. The Thai firm is reportedly seeking the World Bank and Jexim Bank to provide financial support to back its bid. The consortium, which had also sought a stake in the IPP Independent Power Thailand, will face competition from other interested parties. The latter are said to include Mission Energy, Singapore Power International and El Paso Energy International.

  • EIB loan to Budapest

    PFI Issue 155

    The European Investment Bank is providing the Municipality of Budapest with a Ecu110m 15-year loan to finance urban developments and environmental improvements in the capital.

  • El Dorado hits market

    PFI Issue 155

    Warburg Dillon Read and NationsBank have scheduled a bank meeting for Thursday, October 22, to launch general syndication of the US$157.8m project financing backing the construction of the El Dorado merchant power plant in Boulder City, Nevada.

  • Electricity exports to BC

    PFI Issue 155

    The Western Systems Power Pool is seeking approval from the US Department of Energy to allow five new pool members to export electricity to Canada. The five new members of the pool that want to export electricity to Canada are Washington Water Power's subsidiary Avista Energy; El Paso Electric Co; Marubeni's subsidiary MIECO Inc; the Pacific Northwest Generating Co- operative and PP&L Resources subsidiary PP&L Inc.

  • Elwood grows

    PFI Issue 155

    Elwood Energy, a joint venture between Peoples Energy and Dominion Resources, has doubled the capacity of its proposed gas-fired peaking plant in Joliet, Illinois.

  • Enersis repriced

    PFI Issue 155

    The deal for the investment-grade Chilean energy concern Enersis has been recut and repriced by arrangers Argentaria, Bank of America, Chase Manhattan, Citibank and Dresdner, marking a reversal for the Latin American loan market.

  • Enfield school selects

    PFI Issue 155

    The Laing/Hyder joint venture has won the £25m Enfield school project being procured under the private finance initiative. The contract will run for the build-out period plus 25 years of operation. Hyder will run the facilities management. Jarvis is the reserve bidder.

  • Enitel sells 40%

    PFI Issue 155

    The government announced that it will sell 40% of the state-owned telecommunications company Enitel, including the management contract, by June 1999. In doing so, it hopes to raise about US$60m. According to the government, there is no basis price but the winner will have to sign a 20-year concession, that can be extended. There is a three-year period of exclusivity.

  • Enough already on Ingleside

    PFI Issue 155

    General syndication of Ingleside has closed following the addition of CoBank to the bank group.

  • EverPower updates works

    PFI Issue 155

    Construction of Ever Power IPP Co is reported to be nearly on schedule with commercial operations due to start in June next year.

  • Falkirk Schools

    PFI Issue 155

    Falkirk - At a price Falkirk council achieved a major milestone at the end of August. The council, with an annual building budget of o6m from the Scottish Office, secured funding for five new schools. However, it came at a price, in a number of ways. By Rod Morrison.

  • Fesilven has six bidders

    PFI Issue 155

    Fesilven has announced six bidders have qualified to participate in its privatisation.

  • First IPP closes

    PFI Issue 155

    Nakayama Kyodo Hatsuden Co has wrapped up an ?11.8bn financing package and made first drawdown during September. The package comprises a ?5.9bn loan from Japan Development Bank and a ?5.9bn syndicated transaction on a quasi-limited recourse deal.

  • Five BOTs opened

    PFI Issue 155

    Five more power projects have been bid for and opened by the Ministry of Energy & Natural Resources (MENR). The projects were put out to tender on the build, own and transfer (BOT) model. There are already more than 10 existing BOTs in the pipeline, five build, own and operate (BOO) projects, 12 transfer of operating rights (TOR) power plants and 25 distribution company sell-offs.

  • Five into Csepel

    PFI Issue 155

    Five banks have been bought into PowerGen's Csepel Aramtermelo power project financing by arrangers Credit Lyonnais and Credit Suisse to add to the two co- arrangers. Attention will now shift to AES's Borsod project, where ABN AMRO, IBJ and KBC are seeking to arrange a US$230m, 18-year loan in difficult market conditions. The loan was due to close last month.

  • Foster Wheeler on heat

    PFI Issue 155

    Foster Wheeler has been selected by Florida Power & Light to design, manufacture and erect 12 heat recovery steam generators (HRSGs) as part of its repowering programme at the Ft Myers and Sanford Generating Stations. The transaction is valued at approximately US$145m.

  • Fourth SCUT goes in

    PFI Issue 155

    The bids on the fourth design, build, finance and operate, or SCUT, roads have gone in. The project is referred to as Grande Porto and, when completed, will provide a network around Porto.

  • Fuel for Nukes

    PFI Issue 155

    USEC Inc, which specialises in enriching uranium fuel for use in electric power plants, announced that it has initiated a site selection process for a new uranium enrichment production facility.

  • Gas permits awarded

    PFI Issue 155

    Since the Mexican government has opened up the natural gas sector, it has awarded 40 permits to several companies to supply gas to cities such as Monterrey and Mexico City, reaching investments of some US$1.6bn.

  • Gas pipeline gets US$375m

    PFI Issue 155

    Transportadora de Gas del Sur (TGS), one of Argentina's private natural gas transportation operations, has been given US$375m by the Inter-American Development Bank (IDB). The financing is designed to help TGS's five-year capital investment plan.

  • Gas pipeline works begin

    PFI Issue 155

    Construction of a 330km long pipeline that will supply gas from the Corridor Block gas fields to Singapore via Batam is scheduled to start at the end of this year, said state-owned PT Perusahaan Gas Negara (PGN). Completion is due in early 2001.

  • Gazprom sets priorities

    PFI Issue 155

    Gazprom, under pressure from non-payment of domestic bills, will dedicate its capital expenditure overseas to three priority projects in the foreseeable future - the completion of the foreign sections of the US$40bn Yamal pipeline, the Blue Stream pipeline under the Black Sea to Turkey and the South Pars upstream project in the Iranian part of the Persian Gulf.

  • GOGGS back on

    PFI Issue 155

    The redevelopment of the Treasury building is back on as a property private finance initiative project. Negotiations with the original winning bidder of the project, Exchequer Partnership, have resumed.

  • Going with the flow

    PFI Issue 155

    Bids to construct the Ballarat water project went in officially on October 16 by the four shortlisted parties. A series of interviews will be conducted with the shortlisted candidates, and a decision is to be made some time by the middle of November.

  • Gov gives loans

    PFI Issue 155

    Japan has extended more than US$220m in concessionary loans to two projects being developed by government-owned agencies.

  • Greenwich Hospital

    PFI Issue 155

    Index-linked bond funding for Meridian Hospital Meridian Hospital's o91.2m index-linked 30-year bond, issued in July, was hailed by the Financial Times as a model for PFI projects. The issue was structured, negotiated and launched into the market swiftly and, as a result, Meridian actually moved from 15th on the list of PFI hospital projects in the beginning of 1998 to become the sixth to financial close. It should be joint first to open in 2000. By Robert Rees and Sue Dale, Barclays Capital.

  • GSL wins GCHQ

    PFI Issue 155

    The GSL team has won the £300m GCHQ private finance initiative deal to build the spy centre a new headquarters block in Cheltenham. The team is made up of Tarmac, Group 4 Management Services and BT. Project finance for the deal will be raised by Deutsche and the adviser is BoA. GCHQ was advised by Dresdner Kleinwort Benson.

  • GSM agreement near

    PFI Issue 155

    Bank of America, ABN AMRO and Citibank are reported to be on the verge of agreeing a term sheet with GSM operator Eurotel Bratislava for the US$160m of long-term debt they are mandated to arrange.

  • Health PFI moves on

    PFI Issue 155

    The second wave of hospital projects for the NHS is now getting under way with most of the trusts concerned having selected advisers. A third wave of projects is under consideration and around five schemes are due to be shortlisted by year-end from a current list of 10 applicants.

  • HEP disputes Enserch claim

    PFI Issue 155

    National power utility Hrvatska Elektroprivreda (HEP) denied that it had reneged on the terms of the memorandum of understanding it signed with US developer Enserch over a proposed 700MW coal-fired plant at Lokovo Sugarje (PFI issue 151 p54).

  • Highways project on

    PFI Issue 155

    The government of Trinidad has awarded a contract to Stanley Technology Group and Planning Associates to provide technical, administrative and supervisory services for a project to rehabilitate 150km of highways in the country.

  • Holding entity created

    PFI Issue 155

    The government has decided to create a state-run electricity transmission holding company in a drive to modernise its shattering electricity network. The National Transmission Company (ENT), will get the transmission assets, worth about US$2.4bn, that belong to state power entities Edelca, Cadafe and Enelven.

  • Hoping Power ropes in 28

    PFI Issue 155

    A total of 26 banks have joined arrangers Bank of Taiwan and ICBC to extend a limited-recourse facility of NT$32bn to Hoping Power (PFI issue 149 p24). Names were not released, but signing of the deal is likely to occur at the end of this year.

  • Huangmei power seeks partner

    PFI Issue 155

    A foreign investor is being sought for a small heat and power project in the Huangmei county in the Huanggang city in Hubei. The 50MW project, with an estimated annual power output of 325m kwh, is expected to cost about US$48.2m, including a working capital facility of US$3m.

  • Iberdrola to invest US$100m

    PFI Issue 155

    Spain's Iberdrola Energia has announced it will feed US$100m over the next five years to its recently purchased Guatemala Electric Co, known as EEGSA, to modernise the power distribution company.

  • ING mandated022843

    PFI Issue 155

    Calpine is expanding the capacity of its 240MW gas-fired cogeneration facility in Pasadena, Texas, in a US$235m construction project that will add 510MW of capacity to the plant. The Pasadena plant went on-line in July.

  • Ireland

    PFI Issue 155

    Ireland looks for its own brand Ireland looks set to be the next European country to develop a regulatory framework for the introduction of PFI schemes. The country, which is experiencing a period of strong economic growth, is in the process of developing its own brand of public-private partnerships to fund its growing infrastructure needs. By Julie Carr.

  • Jarvis

    PFI Issue 155

    Jarvis - In for life As the UK government's Private Finance Initiative finally seems to be taking off, Jarvis has emerged as one of the key private-sector players. The company's transformation from a traditional construction contractor into a whole life provider and manager of capital assets has taken place over just four years, writes Andrew Cavenagh.

  • Keen foreign interest in Bugok

    PFI Issue 155

    Four shortlisted foreign investors are negotiating with LG group with the aim of acquiring stakes of up to 50% in the latter's 500MW combined-cycle power plant in Bugok Industrial complex (PFI issue 148 p21).

  • Korba looks to the skies

    PFI Issue 155

    A few more details have emerged on the US$677m financing for the Korba East power project being developed by Daewoo Power India Ltd (PFI issue 153). The debt component has been broken down into three export credit agency tranches, a deferred payment guarantee and a rupee- denominated loan by Indian financial institutions.

  • Kyoto could shock US

    PFI Issue 155

    A new report issued by the Energy Administration warns that the costs of implementing the Kyoto treaty to reduce greenhouse gases could cost considerably more than expected.

  • Law Hospital

    PFI Issue 155

    An equity investor's view of PFI with particular reference to Law Hospital With PFI now firmly established in the UK and spreading into Europe, and in light of the recent ASB announcement, non-sponsor equity from parties such as Edison Capital will play an increasingly important role. By referencing the Law Hospital transaction that closed earlier this year, I will endeavour to explain how equity investors play an important role in such transactions. I will also attempt to preview market developments i

  • Loan for road

    PFI Issue 155

    The European Investment Bank is to make a Ecu100m sovereign loan to finance the construction of the first 13km of the planned 31km urban expressway between Katowice and Gliwice in upper Silesia. The new road is designed to relieve traffic congestion and pollution in the region.

  • London Underground

    PFI Issue 155

    LU gets going on PFI/PPP The major private finance deal in the UK over the next few years, even dwarfing the Channel Tunnel Rail Link, will be the o7bn London Underground private public partnership deal (PPP). Perhaps fortunately, given the scale of the enterprise, LU has picked up some experience in the private finance field already. By Rod Morrison.

  • Long Term Funders

    PFI Issue 155

    In for the long term Using private capital for infrastructure projects in Europe is years old. The French say they have been going it since 1559. Yet there is a new momentum. If maintained, long-term funding will be required. This need not necessarily be met by traditional commercial banks or the bond markets. By Rod Morrison

  • Madhya's escrow bind

    PFI Issue 155

    The Madhya Pradesh state government has scaled down the capacity of S Kumar's Maheshwar hydroelectric power project from 400MW to 82MW. The 80% cut in capacity will enable the state to treat the project as a peaking station, allowing the government in turn to accommodate liquid fuel-fired projects totalling a capacity of 330MW.

  • Minimum for Talara

    PFI Issue 155

    The Peruvian government has set a minimum investment price of US$30m as a main condition in the upcoming auction of a 20-year operating contract for the county's second-largest oil refinery.

  • Mobifon launch target

    PFI Issue 155

    The EBRD, ABN AMRO and CIBC hope to launch syndication of an expanded debt facility for GSM operator Mobifon at the beginning of November.

  • More Gerasul for Tractebel

    PFI Issue 155

    An additional R$22m worth of shares in Centrais Geradoras do Sul do Brasil (Gerasul) were bought on October 7, by Belgium's Tractebel, as the group seeks to increase its holding in the Brazilian utility.

  • More wind for Quebec

    PFI Issue 155

    The provincial government of Quebec has come out in favour of a plan to expand the province's wind power capacity by up to 450MW.

  • Morelos draws interest

    PFI Issue 155

    Idesa, Alfa, Celanese, Repsol, Dow Chemical, Shell and Cydsa attended an explanatory meeting held by Mexico's Energy Secretariat to clarify all aspects of the partial privatisation of state-owned oil company Pemex's Morelos petrochemicals plant.

  • Move to dump CPC

    PFI Issue 155

    The US State Department is encouraging Chevron and Mobil to look at exporting oil from the giant Tengiz field in western Kazakhstan through Azerbaijan and Georgia to Turkey's Mediterranean coast rather than to a port on the Russian Black Sea.

  • MRT projects for investors

    PFI Issue 155

    The government plans to throw two major mass transit rail projects to the private sector to develop on a BOT basis. The two rail schemes in southern Kaohsiung and central Taichung were originally meant to be government-sponsored projects. But the Ministry of Transportation and Communication decided that the private sector should have a more direct role in financing and operating the projects to further stimulate the economy.

  • MS to advise Conn

    PFI Issue 155

    Morgan Stanley Dean Witter has been retained by Connecticut Light & Power Co, a subsidiary of Northeast Utilities, to advise on the sale of its non-nuclear generating assets. Northeast's other subsidiary with assets on the block, Western Massachusetts Electric Company, is using JP Morgan as an adviser.

  • Mysore power pending

    PFI Issue 155

    IPS Power is said to be unhappy with some of the terms of the final draft of the power purchase agreement with the Karnataka State Electricity Board (KSEB) for its proposed 110MW naphtha-fired power plant near Mysore.

  • New Cogen for Toronto

    PFI Issue 155

    Toronto Hydro-Electric Commission has entered into a joint venture with Boralex, a subsidiary of the Cascades Group, to develop a new 112MW gas-fired cogeneration plant in the Portlands area of downtown Toronto.

  • New interconnector planned

    PFI Issue 155

    TransEnergie Australia and the New South Wales distributor NorthPower have announced plans to develop an underground transmission interconnection to link the energy markets of Queensland and NSW. TransEnergie is a subsidiary of Hydro Quebec.

  • NFFO5 deals out

    PFI Issue 155

    The list of 261 renewable power projects in the non- fossil fuel obligation order number 5 has been released. The Department of Trade & Industry (DTI) released the general details of the 1,177MW order a couple of weeks ago (PFI issue 154, p43). It will be the biggest of the five orders and has by far the cheapest subsidised prices.

  • No bull022838

    PFI Issue 155

    Trinidad has secured US$620m in investments in two fertiliser factories from US and Canadian companies. The plants, which look set to make Trinidad the largest exporter of fertiliser in the world, are a by-product of the country's burgeoning natural gas industry.

  • NRG buys Sommerset

    PFI Issue 155

    NRG Energy, a subsidiary of Northern States Power, has bought the 229MW Sommerset Station from Eastern Utilities Associates (EUA). The cost of the purchase was US$55m. The project is expected to financially close in the first quarter of 1999 after regulatory approvals.

  • Ogden files for new merchant

    PFI Issue 155

    Ogden Energy Group has filed for regulatory approval for a new 500MW merchant power plant, to be built in Burney, a lumber town located in Northern California.

  • Orlando receives bids

    PFI Issue 155

    The Orlando Utilities Commission has received five bids to purchase three natural gas-fired cogeneration units at the Indian River Generating Station totalling 639MW of capacity.

  • Paraiba electricity rules due

    PFI Issue 155

    The Paraiba state authorities in collaboration with Brazil's Banco Brascan are expected to release the bidding rules for the privatisation of the Paraiba electricity distribution company, Saelpa, on October 30.

  • Pascual works on it

    PFI Issue 155

    Sponsors Edison Mission Energy, Texaco and Caltex are moving along with the term sheet negotiations with arrangers ANZ Investment Bank, SG, DKB, and IBJ for their San Pascual power project financing (PFI issue 154). Negotiations with Jexim and OPIC are also under way.

  • Peaking plant for Neenah

    PFI Issue 155

    Southern Energy is planning to build a 300MW natural gas- fired generating plant in Neenah, Wisconsin. Southern expects the plan will be run as a peaking facility. Wisconsin Electric has reached an agreement with Southern Energy to buy the plant's electricity for eight years.

  • People & Markets022744

    PFI Issue 155

    Dresdner PF takes over export finance A re-organisation of the project finance and long-term export finance activities in Dresdner Kleinwort Benson's head office has been undertaken. Effective in October, both businesses will be integrated into one product unit called the global project and export finance unit. The merger was made to improve the synergies between the two closely related areas. By Boey Kit Yin and Rod Morrison.

  • People & Markets022745

    PFI Issue 155

    Shake-up at Chase Bill Rockford has become the lone head of Chase's project finance group, following four months of cohabitation with Rick Edwards.

  • People & Markets022746

    PFI Issue 155

    North sees a step-down North Ltd's chief executive Campbell Anderson has announced his resignation, effective in early 1999. Anderson, who took up the job in 1993, is believed to be looking for a change in lifestyle and has rejected rumours pertaining to his health and his joining rival BHP.

  • People & Markets022747

    PFI Issue 155

    Wilson moves on Michael Wilson has left Baker & McKenzie in Almaty, Kazakhstan, to establish his own practice, Michael Wilson & Partners (MWP).

  • People & Markets022748

    PFI Issue 155

    Woicke to head IFC Peter Woicke was recently appointed executive vice- president of the International Finance Corp, the private sector arm of the World Bank group. Woicke will succeed Jannik Lindbaek, who will not be seeking a renewal of his five-year term for personal reasons.

  • Petrochems on offer

    PFI Issue 155

    Foreign investors hoping for a slice of Thai petrochemicals projects are spoiled for choice. Thai Oil Co's plans to sell part of its interests in various petrochemicals projects have drawn the attention of Petronas Dagangan of Malaysia and Tuntex Corp of Taiwan. While Petronas has expressed interest in a potential 30% stake in Thai Lube Base Co, Tuntex is eyeing the Thai Paraxylene Co project, as well as a stake in Aromatic Thailand Co.

  • PF deals on track despite GITIC closure

    PFI Issue 155

    The closure of the Guangdong International Trust & Investment Corp (GITIC) caused sentiment towards China assets to turn southward, but the impact was less drastic than expected on the project finance markets. An immediate effect will be to tighten the already small syndication market, but the long-term effect of China's seriousness in clearing out weak organisations is hoped to return confidence in the country. By Boey Kit Yin.

  • Pipe bomb kills 45

    PFI Issue 155

    The bombing on October 17 of the 800km long Ocensa pipeline near the towns of Machuca and Fraguas in the Antioquia province, killed at least 45 people and left 70 others injured.

  • Pipeline drops a link

    PFI Issue 155

    BHP Petroleum has apparently dropped out of the Chevron- led consortium behind the A$3bn pipeline that will pipe gas from Papua New Guinea's remote southern highlands to Townsville and Gladstone in Queensland. BHP, whose equity stake in the project was 9.6%, decided to redeploy its funds elsewhere after a review of its global portfolio (PFI issue 152).

  • Portugal

    PFI Issue 155

    Portugal's determined push The state of Portugal's roads is poor and the government has made the necessary upgrading a priority. A programme of procuring real toll-roads and design, build, finance and operate (DBFO) roads is now in full swing. It will leverage in US$5bn of private finance. By Rod Morrison.

  • Portugal pays Telebras

    PFI Issue 155

    Portugal Telecom is raising US$1.3bn in the syndicated loan market to pay for its shares of Brazil's Telebras, which it bought with partners Telefonica SA, the Spanish telecoms operator, and Iberdrola, the Spanish energy group.

  • Power lawsuit averted

    PFI Issue 155

    The Montana Public Service Commission and PacifiCorp have reached a tentative settlement that could lead to dismissal of the law suit filed by the commission and the Montana Consumer Counsel over the sale of PacifiCorp's Montana electric service area to Flathead Electric Co-operative.

  • PPC projects on

    PFI Issue 155

    The Dutch government is looking at a series of pilot projects under its public private co-operation (PPC) programme, an initiative similar to the UK's private finance initiative (PFI). In a report on PPC, the government says "we must first build up a track record. Complete a small number of transactions which allow capacity to be built up gradually."

  • PPP FINANCE

    PFI Issue 155

    PPP financing for European infrastructure Member states of the European Union are increasingly using various forms of public-private partnership structures to finance major infrastructure in order to meet their requirements for an improved quality of infrastructure services and to stay within the current targets for public sector deficit financing set in the framework of European economic and monetary union. By Thomas Barrett, European Investment Bank (EIB). Noteable progress on PPPs in recent times ha

  • Private Mega

    PFI Issue 155

    A private US$200m placement will allow for the syndicated loan backing the Mega project in Argentina to come to market.

  • Privatisation of eight sectors

    PFI Issue 155

    The government of Jamil Mahuad has announced it will initiate a 15-month plan for the privatisation of eight economic sectors.

  • Q&A for Neyveli

    PFI Issue 155

    Banks invited for the US$100m club deal for the Neyveli project in Tamil Nadu are said to have questions regarding the pricing of the deal (PFI issue 154). The sponsors, CMS Energy and ABB, along with lead arrangers Bank of America and ANZ Grindlays, have margins set at around 250bp over Libor and front-end fees at 230bp. Indications are that the pricing may be too fine to attract banks, given the rich pricing of Dabhol Phase 2, which is also in the market with margins quoted at around 350bp over Libor

  • RBC gets bond away

    PFI Issue 155

    Royal Bank of Canada has placed a £30m, 30-year bond for the University of Greenwich. The proceeds will be used to pay for refurbishment works on buildings at the Royal Naval College and also to repay bank borrowings.

  • Refinery site up in the air

    PFI Issue 155

    Comalco has yet to decide where to site its alumina refinery and the proposed sites still remain as either Gladstone in Queensland or Bintulu in the Malaysian state of Sarawak. The company has been conducting feasibility studies of the A$1.4bn greenfield refinery, which can be expanded to four times its initial output of 1m tpa.

  • Refining crude oil plans

    PFI Issue 155

    A consortium has been formed to carry out an ambitious programme to build three refineries in Indonesia at a cumulative cost of US$7.5bn. The refineries will be located in Batam, Situbobonda in east Java and Pare-pare in Sulawesi.

  • Renong on a hot tin roof

    PFI Issue 155

    Government-backed conglomerate Renong has apparently not met interest and fee payments amounting to some M$12m. This has resulted in a cross-default, with several of the group's subsidiaries said to be in default as a result.

  • Rion Antirion Bridge

    PFI Issue 155

    Rion Antirion bridges the gap The financing package for one of Greece's first ever privately financed projects, the Rion Antirion bridge, was signed earlier this year. The project, one of the European Union's trans-European networks (TENS), is likely to herald the beginning of an active project finance market in the country. By Julie Carr. EURO PFI RION ANTIRION BRIDGE Rion Antirion bridge project has been around in one form or another since the late 1980s, but really only come to the fore in 1995 when

  • Rio's water stagnates

    PFI Issue 155

    The bid for Companhia Estadual De Aguas e Esgotos (Cedae), has been postponed indefinitely. This is despite the fact two consortia presented financial guarantees on October 9 for the sale of the Brazilian water company.

  • Roque extends

    PFI Issue 155

    The close of syndication for San Roque Power Corp's US$445m facility has been extended to October 21 (PFI issue 153). The execution of documents will take place on this date, followed by disbursement of funds by November 2 at the latest. This latter date may be delayed further by technical issues, although this is not completely unexpected. The original execution date for documents was set for October 14.

  • Rough swell for Salton Sea

    PFI Issue 155

    Salton Sea Funding, a subsidiary of CalEnergy, has placed US$285m of 7.475% senior secured series F bonds due November 30 2018. The bonds have an average life of 15- 1/2 years and have been rated BBB-/Baa2. By Ben Carliner.

  • RWE contract valid

    PFI Issue 155

    The contract between German utility RWE and the privatisation authority APV Rt that gave the former the right to develop an 800MW lignite-fired power station at Bukkabrany is valid, according to a senior official in the Economics Ministry.

  • SA gets power

    PFI Issue 155

    Boral Energy is planning to develop a 40MW gas-fired power plant in the south-east region of South Australia. The project will be located adjacent to the Katnook gas processing plant.

  • Satelindo gains Indosat

    PFI Issue 155

    PT Indosat has quietly taken over a 45% stake in PT Satelindo from local firm PT Bimagraha. Indosat was an existing shareholder in Satelindo, with a 7.5% stake. Any relief in state-owned Indosat's acquisition will be short- lived as the government intends to sell a majority interest in the firm.

  • Sengkang power funded

    PFI Issue 155

    Lenders to PT Sengkang Energi have funded the July drawdown request after the sponsors met conditions. They will, however, have to consider another request for a new drawdown for later this month made by the borrower last week (PFI issue 152 p15).

  • Shares offered for hydro

    PFI Issue 155

    Generadora Union and Isagen are working on a public share offer to finance their US$95m plant. The 78MW hydroelectric power plant project, Hidrogen, is to be constructed in El Caparral, Tolima, using the Amoya river as a source.

  • Shell/Eskom unite

    PFI Issue 155

    Shell International Renewables and Eskom have launched a R130m solar power project aimed at supplying power to 50,000 rural households in the country. The project should help the government achieve its target of 72% electrification by 2000.

  • Shuaiba decision soon

    PFI Issue 155

    A decision on the Shuaiba power project is expected shortly. The regional electricity company, Sceco-West, has to decide on which basis to procure the project and who to select.

  • Sincor done

    PFI Issue 155

    The bank list for Sincor, Venezuela's US$4.6bn oil and gas project, which is one of Latin America's largest project deals, has been released, marking the completion of the deal in times of uncertainty.

  • Six bid for airports

    PFI Issue 155

    Six consortia comprised of national and international companies have pre-qualified to compete for a US$517m concession package to upgrade and operate nine south- eastern Mexican airports in an auction planned for October 29. The consortia all paid a Ps100m deposit to participate in the tender.

  • Smelter lights up good news

    PFI Issue 155

    A piece of good news emerged amidst a list of gloomy news - PT Copper Smelter lit its furnaces last week and may begin commercial production in January.

  • Somague wins the west

    PFI Issue 155

    The Somague-led team is expected to be announced preferred bidder on the west real toll road project. A report has been sent to the Somague and Mota teams outlining the decision and an announcement is expected shortly.

  • Some life in 144A

    PFI Issue 155

    Cogentrix came out with US$220m of Rule 144A senior notes last week. The 8.75% notes, underwritten by Salomon Smith Barney, Goldman Sachs and CIBC World Markets, priced at 99.518 with a yield-to-maturity of 8.824% - 425bp over Treasuries. Price talk had been in the 400bp-425bp range.

  • Steel plant to completion

    PFI Issue 155

    Siam United Steel Co (SUS) is prepared to begin commercial operations next month with an initial run at 30% of its full capacity next year. This will gradually increase to between 50% and 70% in 2000.

  • Stranded Cost default risk

    PFI Issue 155

    Bankers Trust Company of California, the trustee of approximately US$6bn in Californian utilities "stranded cost" notes, has warned noteholders that passage of Proposition 9 would constitute an event of default.

  • Strategies for financing fixed-mobile telecoms projects

    PFI Issue 155

    January 1 1998 was an essential milestone for the development of liberalisation in the European telecommunications market. It was also a major date for the financing of telecoms projects in this region. By Jean-Pascal Orcel, senior vice-president, power and telecoms project finance, Credit Lyonnais.

  • Suez increases interests

    PFI Issue 155

    Eager to increase its international ownership and involvement, Suez Lyonnaise des Eaux agreed last week to purchase Sociedad Comercial del Plata's (SCP) interests in Aguas Argentinas, Aguas de Santafe and Aguas Cordobesas in Argentina and Aguas de Illimani in Bolivia for US$150m.

  • Suez wants OSE

    PFI Issue 155

    Suez Lyonnaise des Eaux, Vivendi and Aguas del Gran Bilbao of Spain are rumoured to have offered US$140m for a 30-year concession for the country's waterworks, OSE.

  • Swaps

    PFI Issue 155

    Interest rate swaps in PFI projects After more than three years of competitive process and negotiation, London Underground has closed the Power and Prestige projects. The final act in the drama was the entry into interest rate swaps to convert the floating- rate funding into fixed. Ed Clarke of SG Project Finance and Michael Lousada of SG Interest Rate Derivatives explain how this complex market impacts on PFI projects.

  • Taipower gains AA

    PFI Issue 155

    Taiwan Power Co (Taipower) has been assigned a strong AA rating from international credit rating agency Standard & Poor's for its strong operating and financial status. The state-owned utility firm currently holds the monopoly on power generation with a capacity of 25,495MW. It is also responsible for transmission and distribution networks in the country. S&P felt that the heavy reliance on electricity for economic growth in a country with no indigenous fuel sources puts Taipower in a strategically imp

  • Tax rate out on Vic gas

    PFI Issue 155

    The Office of the Regulator-General (ORG) recently ruled that the allowable weighted average cost of capital (WACC) for gas distributors be raised to 7.75% (PFI issue 154). The industry had been hoping for about 8.5% to enable successful bidders a little more chance of paying off their capital outlay early.

  • Telecom looks for loans

    PFI Issue 155

    The Argentinean telecoms company Telecom Argentina is reportedly looking to tap the syndicated loan market for US$100m.

  • Telgua under fire

    PFI Issue 155

    Questions regarding the sale of state-run telephone company Telgua have been raised by the local press, which claims that concrete details of the transaction are not available.

  • Telkom sees future in stars

    PFI Issue 155

    PT Telkom plans to go ahead with the launch of a US$200m satellite early next year, a move which could tighten its financial position. The satellite launch was to have been supported by a US$47m support from the US Exim Bank, which is believed to have fallen by the wayside.

  • The EURO

    PFI Issue 155

    Euro-denominated project financing The euro is coming. In terms of project timescales, it is already here. A project financing in Europe today denominated in local currency needs to make full provision for euro denomination. After all, if financial close was today, the first phase of the single European currency would be half way through the construction period. By John Burnham, head of project financing and privatisation, Schroders.

  • Third for fertilisers

    PFI Issue 155

    A third Indian fertiliser company, Indian Farm Fertilisers Co-operative (IFFCO), has joined the US$1.1bn Oman-India project to strengthen the Indian shareholding group. Oman Oil Company holds 50% and the two current Indian shareholders are RCF and Kribhco.

  • Three Mile Island sold022857

    PFI Issue 155

    GPU has agreed to sell Unit 1 of Three Mile Island to PECO Energy and British Energy in the first ever sale of a nuclear power plant in the US. The agreement is, however, subject to several regulatory hurdles before it can be finalised. The sale price was reported to involve an initial payment of US$100m, US$23m for the reactor and US$77m for fuel, payable over five years. However, the final price will most likely include additional payments to be based on actual electricity prices through 2010.

  • Thuraya still on

    PFI Issue 155

    The bidding for the mandate to arrange the project financing for the Thuraya satellite project is still on. The two teams bidding have been asked to extend their bids.

  • TPI finalises restructuring

    PFI Issue 155

    Cemex SA of Mexico is poised to make a bid for a 25% stake in cash-strapped TPI Polene. Discussions centre on arriving at an agreed price, but conditions for a buyout will improve when TPI Polene completes a debt restructuring agreement with its lenders, which is expected to be done early next year. Cemex will buy the stake from major shareholder Thai Petrochemical Industry (TPI), which itself has just reached a financial restructuring plan with its creditors.

  • Transit bids due in

    PFI Issue 155

    The bids for the City of Edinburgh Rapid Transit project are due to go in next week. Four bidders have prequalified for the £50m scheme, which involves building special concrete bus lanes in the city centre. The winning consortia will build the network and take the market risk.

  • Tuban seeks new owners

    PFI Issue 155

    Indonesian company PT Tirtamas is still seeking potential buyers to take over half of its 70% stake in the US$2.3bn Transpacific Petrochemical Indotama (TPPI) petrochemical project.

  • Two for South Pars

    PFI Issue 155

    Two groups are believed to be bidding for the next phase of the South Pars gas field development, phases 4 and 5, Shell and Gazprom. National Iranian Oil Company (NIOC) officials said a decision should be made shortly. A phase 6 is planned, which would include a pipeline.

  • UK power finance boom in prospect

    PFI Issue 155

    The Department of Trade & Industry's review of the UK power industry is likely to spin-off a good deal of project and structured financing in the sector in 1999. The review promises lower prices across the generation and distribution sectors, but international companies still seem keen on the market. By Rod Morrison.

  • United Tractors sells coal arm

    PFI Issue 155

    Mining company and coal supplier PT Berau Coal is up for sale by its major shareholder PT United Tractors as part of the latter's fund-raising efforts.

  • Update022785

    PFI Issue 155

    The government has okayed a M$336m soft loan to Malaysian Resources Corp Bhd (MRCB) for its stalled KL Sentral Station project (PFI issue 152). The first drawdown of M$46m has already been made. Drawdowns from the government facility will be based on the certification of the actual physical work at the project site, as per the terms of the facility.

  • Update022788

    PFI Issue 155

    The government has cancelled a contract with Kot Addu Power Co (Kapco). The Lahore High Court has ordered that Kapco receive Rs1.98 per kWh, rather than the current rate of Rs3.44 per kWh. The order was requested by WAPDA and the Ehtesab Bureau, which also seeks a change in Kapco management.

  • Update022792

    PFI Issue 155

    The East Manila water project is indeed slowing down, due to a number of reasons (PFI issue 154). Banks said that the deal is a difficult one to complete, given the MWSS's attitude towards implementing tariff hikes proposed by the MWC. Other issues of concern include the foreign exchange risk elements, as the tariff is peso-denominated.

  • Updates022760

    PFI Issue 155

    The information memorandum on the sale of BHP's power and energy assets was recently released to the market (PFI issue 154). Indicative bids are expected in by October 26. The assets include the Western Australian stations in Port Hedland and Newman (combined capacity of 200MW), the New Zealand Steel power station, the 10% interest in the Goldfields Gas Pipeline, and various developments in Brazil and India.

  • Updates022782

    PFI Issue 155

    A deadline set for banks to decide on the waiver in the Jawa Power deal has been extended from October 15 to 25, to give the lenders more time. Banks have to decide if they want to approve a long-term waiver on the borrower's drawdown requests (PFI issue 153 p13).

  • Updates022806

    PFI Issue 155

    Preliminary preparations on the financing of the Gulf Power IPP are rumoured to be under way (PFI issue 153 p17). Major sponsor Edison Mission Energy, with a 40% stake, is said to be focusing on this project as soon as its San Pascual power project in the Philippines wraps up financing. The other sponsor is Gulf Electric with a 60% stake and it is believed to be made up of mainly Thai companies, including Siam City Cement and Lanna Lignite. Advisers CSFB, BTM and Siam Commercial Bank (SCB) are believed

  • US$2bn plus please

    PFI Issue 155

    Four of the five build, own and operate (BOO) power deals have made a significant step forward with the signing last week of the main project documents. Project finance of more than US$2bn will now have to be raised in 18 months under the terms of the deal. Construction period is then 30 months.

  • UtiliCorp ups stake in PNZ

    PFI Issue 155

    UtiliCorp United has successfully increased its shareholding in Power New Zealand (PNZ) from 37.5% to 78.6%. UtiliCorp purchased Mercury Energy's 33.2% and WEL Energy Group's 7.9% of PNZ shares for around NZ$333m and NZ$78m, respectively.

  • Virgin winners

    PFI Issue 155

    Virgin Rail Group (VRG) has selected the funders for its £850m train procurement projects. Royal Bank of Scotland and its Angel rolling stock subsidiary will fund the £500m West Coast Main Line deal and GL Rail Leasing, a joint venture between GATX of the US and NatWest's Lombard, will fund the £350m CrossCountry purchases.

  • Wheel dealed

    PFI Issue 155

    The £20m project loan backing the £30m Millennium Wheel has been signed by WestLB and Sumitomo. The project is being developed on London's South Bank by British Airways and The Tussauds Group, which are putting in most of the equity.

  • Windy's flag flies high

    PFI Issue 155

    Market rumours suggest that Warrama Consulting has been appointed as the financial adviser to Precious Metals Australia (PMA) on securing project finance loans for its Windamurra vanadium mine project (PFI issue 152). Deutsche Bank, which is believed to have finished its advisory obligations, is now concentrating on leading the financing for the project.

  • Writedowns for US investors

    PFI Issue 155

    NRG Energy of the US will write-down its accumulated project development expenditures for its Cilegon power project in West Java as of the end of third quarter business. On a pre-tax basis, the writedown will be US$20m and US$13.3m after tax.