OrPower 4 Inc.

MIGA has provided Ormat Holding Corp. of the Cayman Islands, a wholly owned subsidiary of Ormat Industries Ltd. of Israel, with a $70 million guarantee to cover its equity investment and shareholder loan totaling $171 million, in OrPower 4 Inc. in Kenya, as well as future loans to the project. The coverage is against the risks of transfer restriction, expropriation, war and civil disturbance and breach of contract, and is for a period of 14 years. Additionally, MIGA increased coverage on Phase 1 of the plant, insured by MIGA in fiscal year 2000, by $11.5 million.

OrPower 4 Inc. involves the design, construction and operation of a 48 MW geothermal power plant, located in the Olkaria geothermal fields, in Kenya's Rift Valley, some 50 kilometers north-west of Nairobi. Geothermal power is a clean, renewable, and low-cost source of energy, and Ormat will bring to the project its experience in this area, as well as state-of-the-art geothermal technology. The plant will add to the capacity already provided by a 12 MW plant built during Phase 1, which MIGA insured in fiscal 2000, and will help alleviate the problem of severe power shortages from which the country suffers. In a country where only about 10 percent of the population has access to electricity, the project will provide power to many first-time users. OrPower 4 will also help reduce Kenyas heavy dependence on hydroelectric power. With some 70 percent of the 1,000 MW installed capacity being hydroelectric, Kenya's national power production was severely curtailed during the three-year drought that ended in 2001. The project will play an important role in achieving greater reliability, security, and stability of power within the national grid, and will reduce the dependence on imported thermal energy, thereby having a positive impact on the balance of payments.

Situated in a rural area with high unemployment and under employment, the project is expected to employ 44 people for operations and up to 700 full and part-time workers during the construction. There will be a significant transfer of skills and technology. Training programs will be set up, and will include optimization of operations, plant maintenance, geothermal technique, security, business, and administration. Approximately 80 percent of goods and services will be procured locally. In addition to royalties, the project will pay approximately $27 million in taxes to the government over its lifetime.