Zurich Surety insures carbon trade of Chile's 19.4-MW Lircay

Financial services provider Zurich has been hired to provide trade credit insurance to cover carbon emissions credit transactions of the 19.4-MW Lircay hydroelectric project on the Lircay River in Chile's Region VII.

Zurich's Surety, Credit, and Political Risk group was commissioned by credit risk broker Alliant Emerging Markets to mitigate political and counterparty default risks for CQuest Capital, which is advancing funds to the US$49 million Lircay, also called Hidromaule.

The World Bank's International Finance Corp. (IFC) is providing US$21.7 million in debt financing to the run-of-river project, which began operation in October 2008. Project operator Hidromaule S.A. is a joint venture of Sorgent-e S.R.L. of Italy and Empresa Austral Andina S.A. of Chile.

The project is being registered to sell Certified Emissions Reductions (CER) under the United Nations' Clean Development Mechanism program. It is expected that Hidromaule S.A. will be able to sell 50,000 CERs annually, covering 2008-2012, generating an additional US$1 million in revenue each year.

Partners advance two more sites on Lircay River

Sorgent-e S.R.L. and Empresa Austral Andina have formed another development company, Hidroelectrica Rio Lircay S.A., to develop the Hidromaule 2 project, consisting of the 6-MW Mariposas and 12.8-MW Providencia hydro plants and transmission interconnections.

Like Lircay, the Hidromaule 2 projects are to utilize water rights owned by the Canal Maule Association for water from the Maule River that is stored upstream in Maule Reservoir.

Hidroelectric Rio Lircay has applied to the IFC for financing of the US$45 million project. The proposed IFC investment includes loans totaling US$15.75 million from IFC’s own account and loans totaling US$15.75 million syndicated from lending participants' accounts.

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