Proinversion to award Yuncan contract Oct.24

Peru's state investment agency Proinversion plans to receive bids and award a 30-year contract to operate the 130MW Yuncan hydroelectric project on October 24, Proinversion announced. Proinversion plans to approve and publish bidding rules on its website (www.proinversion.gob.pe) by September 12, a Proinversion source told BNamericas. The minimum price has been set at US$200mn. Total estimated investment in the project is about US$262mn, of which the Japan Bank for International Cooperation (JBIC) is financing 75% and the government 25%. State power company Egecen is building the plant, but had to stop work in April after the government ran out of cash to finance its 25%. Work restarted in June, and is now over 60% complete. The plant is scheduled to start operations in July 2005. The concessionaire will have to pay the government some US$32mn every semester from September 30, 2003 until June 30, 2005. On Monday, the Andean Development Corporation (CAF) approved a financing guarantee of up to US$50mn for the payments, the CAF said in a statement. The government will give the guarantee to the concessionaire as insurance in "the remote" case the project is not completed on time, the source said, adding that US$50mn is a "ceiling." Previous attempts to auction the concession were suspended in February due to a dispute over ownership of the project with Pasco department authorities. The two parties came to an agreement in June under which Pasco will receive the premium above the minimum price. US-based power company PSEG, Belgian utility Tractebel, and local mining outfit Volcan pre-qualified for the first auction in February so they are automatically pre-qualified this time round, the source said, adding that other companies can also enter the bidding. Tractebel and PSEG have expressed doubts about the viability of the project due to certain technical "challenges," including the construction of a 20km tunnel, but the source denied there are any difficulties. "A while ago there was a problem in one of the tunnels, but they are working on the other side of the tunnel and it will be the same in the end," the source said.