Ormat Momotombo Power Company

In its first project in Nicaragua, MIGA issued a guarantee totaling $81.4 million to Ormat Holding Corp. (Ormat) for its equity investment in Ormat Momotombo Power Company (OMPC). The proceeds of OMPC's investment will be dedicated to the rehabilitation and expansion of a 70 megawatt geothermal power generation plant and its associated facilities, located in Momotombo, Nicaragua. The MIGA guarantee will cover the investment against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract. It also allows Ormat to assign part of its coverage to future lenders under separate nonshareholder contract guarantees.

The project involves the rehabilitation, expansion, operation and maintenance of a 70 megawatt geothermal power plant and field located north of Managua, the capital of Nicaragua. The plant was originally designed to generate 70 megawatts, however, due to a lack of resources, it was limited to producing 10 megawatts. The investment will have a significant impact on the availability of energy, as the rehabilitation program will allow the plant to increase its generating capacity significantly above the 10 megawatt level. Ormat was awarded the exclusive rights to manage and operate the project for 15 years and, at the end of the concession, will hand the facilities back to ENEL, the state-owned utility.

During the life of the project, the plant will pay approximately $11 million in taxes and procure 90 percent of its goods and services locally. Additionally, OMPC expects the price of its electricity to be among the lowest available and to help to lower the weighted average cost of electricity in Nicaragua. Furthermore, the introduction of the plant's state-of-the-art geothermal technology will bring the project into compliance with modern industry environmental standards.