IFC to fund Acajutla LNG project in El Salvador

The International Finance Corporation is planning to provide investment support for the Acajutla LNG project that is located in the port of Acajutla, Department of Sonsonate, in El Salvador. The project involves the construction, operation and maintenance of (i) a 378 MW gas-fired power plant that will run on natural gas, and (ii) an offshore liquified natural gas import terminal, which will include a dedicated, permanently moored, floating storage regasification unit that will deliver gas to the power plant via an approximate 1.3 km subsea natural gas pipeline and a 500-meter onshore underground pipeline.

The Project also includes the construction of an approximate 44 km, 230 kV transmission line connecting the power plant to the Ahuachapan substation and a 0.4 km, 115 kV transmission line connecting the power plant to the Acajutla substation. The power plant and the FSRU will be located within an existing port and industrial area, secured under a 24-year lease agreement with the Executive Commission of the Port of Acajutla (CEPA), who owns and manages the port.

IFC will provide financial additionality through long term debt financing and mobilization of funds tailored to fit the cash flow needs of the Project. Local and regional commercial banks have shown no appetite for long tenors required by the Project. IFC's role in providing required credit enhancement for the introduction of LNG into El Salvador is critical to ensure the development of a lower-carbon power sector in the country and in the region. The introduction of LNG into Central America involves technical and financial complexities especially within a non-recourse project finance structure.

Through its involvement in three other LNG-to-Power projects in Latin and Central America, IFC will play a catalytic role in ensuring the bankability of the power offtake arrangements, financial structuring of the project and mobilizing other lenders. IFCs Social and Environmental Sustainability Policy will set key benchmarks for the Project, taking into account the experience in other LNG-to-Power projects, further helping in mainstreaming the implementation of such projects across emerging markets.

IFC is also expected to work with the sponsors on the Project's long-term Corporate Social Responsibility plan in Acajutla.