Chilean desal plant funding progresses
Sponsors of a $1.3 billion desalination plant in Northern Chile - Marubeni and Transelec - are re-examining contracts for the scheme with lenders and the offtaker, with EPC and debt negotiations progressing.
The tender was scrapped in December 2019 by Chile’s state-owned copper miner, Codelco, when the country was facing a series of unrests, a situation aggravated by a lawsuit against one of the original planned equity investors, Techint.
Chile's national oil company Enap accused Techint of involvement in corruption. Offtaker Codelco, which will use the plant to supply water to three of its mines, then suspended the project that had been awarded a month before.
During 2020, Codelco studied the possibility of opening a new auction. After months of negotiations to solve this issue MTT – the winning consortium led by Marubeni – excluded Techint as an investor. The Italian-Argentine group might still be used as an EPC contractor, without equity participation.
Financed on a debt to equity ratio of 80/20, Mizuho is believed to be advising the consortium, with other Asian banks expected to finance the project, including SMBC, Mizuho, JBIC, KDB and possibly MUFG.
The BOOT contract foresees that the consortium will supply water for 20 years after commencement of operations. Startup was planned for 2022 and now will be delayed at least to 2023, which has the potential of compromising Codelco's mining operations. The state-owned company has been accused of leaving local population without access to enough ground water, a scarce resource in the region.
