MIGA has issued €99 million in guarantees for the construction of a new power plant in Bulgaria. The guarantees cover €89 million in loans and interest on loans syndicated by Calyon of France, and a €10 million equity investment by AES Bulgaria Holdings BV, wholly owned by US-based AES Corporation. The guarantees are for 16 years and cover the risks of expropriation (loans only) and war and civil disturbance (loans and equity). MIGA’s involvement played an important role in the project’s ability to mobilize long-term commercial bank funding.[1]
The private project company, AES-3C Maritza East 1 EOOD, will finance, build, own, and operate a 600 MW (net) lignite coal-fired power plant adjacent to the old Maritza East 1 power plant, near the municipality of Galabovo, about 270 km southeast of Sofia. The nearby Maritza East Mines will supply the lignite under a 15-year purchase agreement. The €1.1 billion plant, a base-load facility, will connect to the Bulgarian power grid for distribution throughout the country. NEK, the state-owned grid operator, will purchase the electricity under a 15-year agreement.
The environmentally compliant, efficient, state-of-the art facility will support future demand for electricity as the nation’s economy grows, while utilizing Bulgaria’s only indigenous fuel source. Once operational in 2009, AES Maritza East 1 will replace inefficient and environmentally incompliant thermal capacity. The plant is expected to create significant direct and indirect job opportunities in the region of Galabovo.
The project promotes the restructuring and privatization of the power sector, a cornerstone of Bulgaria’s medium-term reform program supported by the World Bank Group.
[1] The guarantee was cancelled on August 31, 2022.
